What is the definition of Political Risk Insurance?
Political Risk Insurance refers to the protection provided to businesses against losses due to the political condition of a country. This is especially for businesses that operate out of the country and includes political unrest and upheaval, such as revolution, war, or the confiscation of property. It also protects against a foreign government's altering of their policies and regulations that will result in a loss.
Political risks also include business interruption, inability to repatriate funds or convert it into applicable currency. It can also include acts of the government to wrongfully call on-demand guarantees (such as letters of credit), as well as acts of frustrating or repudiating contracts.
Political risk insurance is not just provided by private insurance companies. Public agencies also sell this kind of insurance.
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