Risk Insurance – Natural Disasters
Most ordinary insurance policies do not cover against earthquake damage. This is a policy that would be taken out separately for those businesses and homeowners in specific high risk, earthquake prone locations.
Flood Risk Insurance
Flood Insurance will usually need to be taken out separately as the majority of commercial property insurance policies do not protect against the risk of floods. Flood damage can be devastating to your business premises with even a few inches of flood water decimating a property and destroying electrical equipment and vital documents. Flood insurance is essential to protect your company premises and operations and prevent massive business losses in the event of water damage.
Not widely offered, this type of cover is usually limited to locations with a high probability of volcanic eruptions. American businesses operating in countries with regular volcanic eruptions may find such cover necessary.
For areas particularly prone to high wind events such as storms, tornados and hurricanes, businesses and homeowners can choose to take out specialty cover.
Risk Insurance – Political, Terror, War
Political Risk Insurance
Political Risk Insurance (PRI) is taken out by businesses to protect against political risks which could result in loss of profit or business interruption. There are a number of types of political risk including revolution, war, terrorism, political violence and insurrection. Other political risks include confiscation of assets by a government, the inability to repatriate funds or if foreign currency becomes inconvertible.
With vast numbers of American companies having business operations in countries across the globe it is essential to take out a political risk insurance policy to limit losses and protect against any of these political risks.
Terrorism Risk Insurance
The Terrorism Risk Insurance act came into effect in 2002 as a temporary measure to allow insurance companies to recover from 9/11. TRIA was created to give the insurance industry time to develop solutions for insurance claims that are associated with acts of terrorism. A reinsurance facility was set up to offer coverage to insurers after an act of terrorism has been declared. This act has been extended to 2014. 90% of the insurer’s losses are paid by the federal government while the other 10% is paid by the insurance company. The US government must declare it an ‘act of terrorism’ before this can occur and other stipulations are in place.
War Risk Insurance
War risk insurance would cover a business from the risk of war or armed conflict in whichever country they do business. There are two types of war risk insurance policies; a war risk utility policy would cover business premises and property. The second type of war risk insurance policy is war risk liability insurance which would cover employees and customers along with their personal effects.