Learn how political risk insurance protects investors and lenders against expropriation, political violence, and transfer restrictions.
Political risk insurance protects investors and lenders against losses caused by government action or political disruption in a foreign country.
It is most relevant in cross-border investing, project finance, infrastructure, and emerging-market lending.
Depending on the policy, political risk insurance may cover losses tied to:
The coverage is designed for events that are political in origin rather than ordinary commercial underperformance.
This insurance can make a project financeable when lenders or sponsors would otherwise see the jurisdictional risk as too high.
It does not remove business risk, operating risk, or market-demand risk. It targets the political layer of uncertainty.