Considering political risk insurance is a good idea if your company operates in an emerging market. It can protect you against political violence or any other upheaval resulting in property, assets, or investment loss.
Various financial institutions and insurance companies offer this kind of protection. Therefore, if you already have an insurance policy or you’re considering investing in one, you may be curious about filing a claim. Here are some top tips we can give on the process of how to file a political risk insurance claim.
Understand Your Political Risk Insurance Policy First
The coverage you get will depend on the policy and the terms used. It is advisable to check any insurance policy you purchase professionally. What does political risk insurance usually cover? Here are some of the most common events covered:
- Rioting, insurrection, civil unrest, terrorism, war, and other forms of political violence.
- Confiscation or expropriation of private assets.
- Contract rejection, breach, or repudiation or government frustration.
- Inappropriate calling of letters of credit.
- Business interruption.
- Issues related to currency include inconvertibility or inability to return funds to your country.
You should clearly understand what your political risk insurance policy covers. This ensures you file a claim on time.
Insurers typically indemnify political risk claims (paid out) after a certain period. The Waiting Period generally is between 120 to 360 days, and your country’s risk rating may affect the exact Waiting Predetermined.
When filing a political risk insurance claim, you must list each of your debtors separately, even if your policy covers multiple debtors or transactions. That’s because, in the eyes of the insurer, each debtor is evaluated based on their risk rating.
It is important to note that claims can be triggered by cancelling an import license or embargo (or classic political risks). However, they are also often driven by government action or currency inconvertibility. You must clearly understand these triggers to have all the information they need when determining whether to file a successful claim.
The Approval and Review Process Maybe Lengthy
In situations where the events are clear-cut, such as a government seizure of assets, you could expect to be compensated relatively quickly. However, because of the complexity of political unrest and violence, the review and approval process for insurance claims can be lengthy. It’s essential to remain patient, stay in contact with your insurer, and provide them with all required documentation to help expedite the process.
We Can Help You Find a Suitable Policy and Insurer
If you are an Australian business looking for the right political risk insurance policy and insurer, Niche Trade Credit can help you find the ideal solution. As an experienced insurance broker in Sydney, we have the expertise to protect your business from political unrest, seizure of assets, and more.
If you want to learn more about political risk insurance, don’t hesitate to contact us. We will gladly answer your queries and explain this special type of risk protection insurance in detail.
Learn more: What is political risk insurance?
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