Political Risk Insurance Cover – Things You Need to Know and How It Works

Political risk insurance offers financial security to businesses and investors who may lose money due to any political event. It protects them against any action taken by the government resulting in huge business losses.

Importance of Political Insurance Cover

It is important to have political risk cover, if you do business with developed countries and underdeveloped countries. It is very unfortunate for a business incur monetary losses due to any country’s government policy. To overcome this kind of situation, you need to opt for insurance cover so that financial inflows do not get hampered.

Niche trade credit has a highly qualified and experienced team to full fill your requirements related to political risk cover and to ensure that the company gets the desired risk covered. It includes exporters, project lenders, contractors and importers.

Need To Buy Political Risk Insurance Cover

Many banks, financial lenders, traders, vendors are associated with companies that are working on overseas project. They may belong to the private sector or government bodies of any country. To keep the projects on the safe, companies do the valuation of their project investment by insurance companies and take political risk cover to satisfy financial institutions.

By taking political risk coverage, companies to get secure for their investments in any unpredictable circumstances. Your losses are covered by the insurer, and thus you’ll be in a better position to fulfil your future financial commitments. This is mainly long term, meaning your company can be covered for as long as 15 years.

What All Can Be Covered In Political Risk Insurance Cover 

These kinds of policies can include many risk factors like political violence, seizure of property, non-payment, change of government, war, inconvertible currency, dummy letter of credit, a lapse in the contractual period, civil war, terrorism, sale of the project, unforeseen circumstances and currency issues.

Factors Exposing Political Risk

On a timely basis, political surveys are being conducted, and according to them most of the organizations incur losses in money exchange. There are many countries where market crisis erupts too often than said. It is understandable that the risks have increased and for this reason, many companies are falling under great pressure to evaluate their actual threat to their business.

Evolving Markets

As per the present scenario, there are evolving markets in different developing countries, where many multinational companies want to grow, keeping in mind the risk factor involved. While companies are investing in these markets to grow, but there might be some worst-case scenarios wherein company’s assets are mishandled or destroyed.

To start or continue business and invest in developing and under developed countries, political risk insurance is a must for any company. This will help to enjoy the commercial benefits, keeping in view the unforseen political risks. It is specifically designed to reduce the potential political risks and allow businesses to invest, lend and build infrastructure in the evolving markets, without stressing out.

Is political risk insurance similar to terrorism and political violence insurance?

The answer is no. The damages done to the business due to violence erupted from any political or government action will be covered by the political violence insurance. Similarly, terror prone areas need to get terrorism insurance for their business to cover the losses of property and funds.