Political risk insurance provides financial protection to investors, financial institutions, and businesses that face the possibility of losing money because of political events. It protects against the possibility that a government will take some action that causes the insured to experience a large financial loss.
Political risk insurance can cover many possibilities, such as expropriation (e.g., government confiscation of property), political violence (e.g., acts of civil unrest or insurrection), the inability to convert local currency and repatriate it, sovereign debt default, and even acts of terrorism and war.
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Answer:
Political risk insurance provides financial protection to investors, financial institutions, and businesses that face the possibility of losing money because of political events. It protects against the possibility that a government will take some action that causes the insured to experience a large financial loss.
Explanation:
Political risk insurance can cover many possibilities, such as expropriation (e.g., government confiscation of property), political violence (e.g., acts of civil unrest or insurrection), the inability to convert local currency and repatriate it, sovereign debt default, and even acts of terrorism and war.