By Shaun Crosner and Jeffrey L. Schulman
For most Americans, the notion of being kidnapped and held for ransom is nothing more than the plot to a good action movie. For certain wealthy and high-profile individuals living and traveling abroad, however, kidnapping can be a very real threat—as evidenced by the recent kidnapping of Washington Nationals catcher Wilson Ramos.
On November 9, 2011, gunmen abducted Ramos from his home in his native Venezuela. Two days later, Venezuelan commandos stormed a mountain hideout and, after exchanging heavy gunfire, rescued Ramos from captivity. After his release, Ramos provided detail of his abduction. He described being driven around Venezuela for hours and changing vehicles numerous times before arriving at the mountain hideout of his kidnappers. According to Ramos, the kidnappers had one demand: money.
While Ramos is believed to be the first professional baseball player kidnapped and held for ransom in Venezuela, the families of professional athletes are commonly targeted there. For example, in December 2008, the brother of catcher Henry Blanco (then of the San Diego Padres) was kidnapped and held for ransom before being murdered by his abductors. In June 2009, then-Colorado Rockies catcher Yorvit Torrealba’s 11-year-old son was kidnapped and held for ransom before being rescued. In November 2009, in separate incidents taking place over a two-week span, the mother and cousin of former New York Mets pitcher Victor Zambrano were both kidnapped and held for ransom; Zambrano’s mother was subsequently rescued by commandos, but his cousin was killed before rescuers could locate him.
The threat of kidnapping is certainly not unique to baseball, to Venezuela, or to professional athletes themselves. The major U.S. professional sports are well represented by players and coaches from around the world. And, with the advent of the World Baseball Classic and other international tournaments and events, players, coaches, and team executives routinely find themselves traveling around the globe.
Although Ramos’s story has a happy ending, it highlights the dangers facing professional athletes, coaches, and team executives who travel or live abroad. In response to these unique risks, a number of individuals and entities in the sports industry are looking into a specialty line of insurance coverage known as “kidnap and ransom” insurance.
Understanding Kidnap and Ransom Insurance
Kidnap and ransom insurance policies provide coverage for high-profile individuals—including professional athletes, coaches, and team executives—while they are traveling or living abroad in high-risk regions. These types of policies then obligate the insurer to pay those costs necessary to secure the safe return of an “insured person” kidnapped in a “covered territory.” These costs include, most notably, the ransom amount paid (up to policy limits) on behalf of the insured person in exchange for his or her release.
Additionally, depending on the terms of a particular policy, kidnap and ransom coverage can provide indemnity for a variety of other expenses related to the negotiation and delivery of a ransom payment. For instance, at the policyholder’s request, many kidnap and ransom insurers will hire and dispatch experienced security consultants to coordinate the negotiation and payment of the ransom. A number of policies likewise cover the cost of hiring an interpreter, if necessary, to facilitate negotiations with the kidnapper. Some kidnap and ransom policies also cover payments to “informants” who possess and provide information concerning the whereabouts of the kidnapped individual or the kidnapper’s identity.
Many policies also cover the costs of medical and psychiatric care for the kidnapped individual following his or her release. Kidnap and ransom policies also commonly cover travel expenses incurred by the policyholder to fly the released individual (or his or her relatives) home.
Although kidnap and ransom policies can provide broad coverage for the various expenses associated with negotiating and delivering a ransom, these policies generally contain various exclusions as well. For instance, some policies bar coverage for kidnappings that take place in certain excluded geographical regions. Others purport to exclude coverage for kidnappings planned or facilitated by a relative or employee of the policyholder.
Common Policy Conditions
Kidnap and ransom policies also typically include a number of policy conditions, some of which can impact coverage in significant ways. For instance, because policyholders with kidnap and ransom coverage could be attractive targets for kidnap plots if the existence of the insurance was known, many policies contain confidentiality clauses prohibiting the insured from discussing the coverage with third parties. Breach of these confidentiality provisions can result in a forfeiture of coverage.
Policyholders should also expect to see certain notice-related provisions in their kidnap and ransom policies. In particular, kidnap and ransom policies commonly require the policyholder to immediately notify the insurer and local law enforcement agencies of a kidnapping. Failure to provide prompt notice of a kidnapping can, depending on the particular policy language at issue, jeopardize coverage.
Purchasing the Right Policy
Because the scope of coverage can vary widely from policy to policy, it is important that policyholders carefully evaluate their coverage needs prior to purchasing kidnap and ransom insurance. Indeed, by keeping a few tips in mind, policyholders can avoid many typical coverage disputes and ensure that they purchase policies that suit their particular needs.
For one, when purchasing a kidnap and ransom policy, the policyholder should pay close attention to who is insured under the policy. Insured athletes, coaches, and executives may also want to purchase coverage for their relatives, friends, or employees. A good rule of thumb is to purchase a policy that covers each individual for whom the policyholder would pay a ransom in the event of his or her kidnapping.
Furthermore, policyholders should make sure that their policies provide coverage in the desired geographical regions. Some policies provide worldwide coverage, whereas others (as explained above) exclude coverage for kidnappings taking place in certain specified geographic regions. Therefore, when purchasing a kidnap and ransom policy, policyholders should take stock of their coverage needs and select a policy that provides the desired scope of coverage.
Policyholders should also carefully consider the practical consequences of policies with stringent notice requirements. As discussed above, many kidnap and ransom policies purport to void coverage if the policyholder fails to immediately provide notice of a kidnapping to both the insurer and local law enforcement agencies. Such provisions may seem relatively uncontroversial, but they can prove problematic in instances where the kidnapper forbids the policyholder from notifying local police or other authorities. To avoid coverage disputes over the enforceability of such notice-related terms, policyholders should attempt to negotiate more favorable provisions. For instance, policies that only require immediate notice “where practicable” can give policyholders much-needed flexibility when responding to a kidnapping.
Finally, prior to purchasing kidnap and ransom coverage, policyholders should closely review all policy exclusions and other limiting terms. In some instances, policyholders may be able to negotiate more favorable terms, often without any significant increase in premium.
Conclusion
With the continued globalization of professional sports, an increasing number of athletes, coaches, and team executives are contemplating the purchase of kidnap and ransom coverage. Although this coverage can be a valuable asset to those living and traveling in foreign countries, policyholders must make sure that they purchase policies that meet their precise coverage needs. Then, once a policyholder settles on a particular policy, the policyholder should carefully review all terms and conditions of the policy.
While one can never be completely prepared for a kidnapping, having the right policy in place—and understanding how it works—can provide peace of mind for those individuals living and traveling abroad in high-risk regions.
Shaun Crosner, a Los Angeles-based attorney in Dickstein Shapiro LLP’s Insurance Coverage Practice, is the co-leader of the firm’s Entertainment and Sports insurance Initiative and an editor and primary author of LexisNexis’s New Appleman Sports and Entertainment Insurance Law and Practice Guide (2010). Jeffrey L. Schulman is a New York-based attorney in Dickstein Shapiro LLP’s Insurance Practice and a contributing author of LexisNexis’s New Appleman Sports and Entertainment Insurance Law and Practice Guide (2010). Mr. Crosner and Mr. Schulman represent policyholders in disputes with their insurers.
