Does my DBA Insurance policy cover expenses I might incur if an employee were to be kidnaped?
This topic is something that we don’t really want to think about. However, the world can be a dangerous place.
It’s a great question and as with most insurance related questions, the answer is “it depends.”
Let’s dive in.
What’s included on your DBA Policy
As you know DBA policies exist to cover your employees while working for you overseas after you have accepted a government contract.
On most DBA Insurance policies there is an endorsement (fancy term for add-on coverage) that extends coverage and payments for events in one of the following categories:
- Kidnap and Ransom/Extortion (K&R)
- Wrongful Detention
- Hijacking
Heavy stuff right there.
A typical DBA policy will cover these events up to a certain limit of liability. In this case, an aggregate(or total limit) of $500,000 is often seen.
You should also note that the policy also covers expenses surrounding one of these events.
Things like, ransom monies, consultant expenses (because who really knows what’s best to do when this happens), judgments and court defense costs, and other expenses due to this loss.
Special limits of coverage apply to most of these areas. Many times a $50,000 limit is set on these surrounding costs.
One final interesting fact is that this coverage applies to actual and alleged kidnapping or extortion. In other words, we don’t need certainty that an actual event has occurred.
What’s in the fine print?
To boil it down for you, many DBA policies have exclusions when it comes to K&R type events.
One of the more obvious exclusions would surround facts like an employee decides to arrange a “fake” hijacking or kidnap in order to get some payout from your DBA policy. Or you decide to fake kidnap one of your employees.
Other exclusions might include:
- If an employee was detained because they broke an actual law in the host country.
- Failure to evacuate a country within 10 days after an evacuation order was given
- Travel to a country after a travel advisory was given
- Any employee who is an active member of a government organization, law enforcement, or military force.
The event in question also must occur during the actual policy period that the DBA policy is written. And this should make sense, as we cannot go out and purchase a policy after something has already occurred.
You also must make every effort to determine that the event actually is a kidnap or ransom. An employee simply out of contact from you for a reasonable period of time is not necessarily justification to activate the DBA policies kidnap and ransom coverage.
Got it. So who is covered and when?
So we have already talked about the event having to take place during the actual policy period. We also must be very clear in our understanding of the scope of the DBA.
If you are contracted to work in a relatively safe area of the world, your DBA policy may very well NOT cover your employees while they are “off the clock” so to say.
>>>If you need more information about the actual DBA Policy and its coverage limitations jump on over to our article about this topic by clicking this link. <<<
Depending on where the work is actually being done a “zone of special danger” can also activate the DBA policy beyond typical working hours.
As an example, If you have an employee in Afghanistan and they are kidnapped doing some recreational activity on a day off or outside their normal operating hours, the zone of special danger doctrine would most likely apply and cause the policy to respond.
We’ve also written more about the Zone of Special Danger in this article.
Big idea here, your DBA policy will NOT cover kidnap and ransom of your employees in all circumstances.
Last Question, How do I cover employees while they are off the clock?
At this point you might be thinking if the DBA Policy won’t cover my employees while off the clock, is there an insurance policy that will?
Great question. And fortunately, the answer is yes.
There are many insurance policies that you can purchase that will cover not just your employees but your total operation in foreign lands.
These products are available and often have a K&R endorsement in them. It would look very similar to the coverages we discussed above but would extend beyond just normal working hours.
They also include travel accident and sickness interruptions, foreign automobile liability and much more.
We recommend you pair your DBA policy with a foreign policy in order to firmly protect your assets no matter where they are in the world.
The Claim
Tough topic all round with this one. Kidnap and ransom is one of those things that we wish the world never saw.
Unfortunately, there are many bad actors out there. It’s always best to know what your potential risk is prior to accepting a mission or contract for work.
The big takeaway for you here should be this. Don’t think that just because you purchased a DBA policy your employees are covered in all times of the day.
Again, depending on the location of the work being performed, a worldwide or foreign policy will help you protect employees and other assets more completely.
For more information or to speak with one of our agents directly about this topic click the contact us link.
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Thanks for reading.