As a manufacturer, marketer, investor, entrepreneur, business person or as a trader often you observe there are issues to be dealt because of political risk factors. The political risk may be in the form of changes in economic policies, upcoming Government decisions, pandemic situation, global market shut down due to political war, State rules changed or any other social changes that can affect your financial gain. You can even meet political risk when the Government changes the currency or restrictions are enforced by your State authorities.
Sometimes the whole political risk factors affect your trading or manufacturing arena resulting in a huge loss. The only solution to remain safe from such losses is to own political risk insurance. While you are an exporter the need to deal with the insurance is quite essential as it will save you when global economic changes adversely affect your sales.
Know the coverage features of political risk insurance policy:
- While you products are denied to be accepted by the buyer when shipped to them.
- Non payment for sold goods because of political strikes or due to non favourable social conditions.
- While a Government organisation denies paying on time for the products delivered due to some legal issues.
- While the buyer of any state or country fails to accept the goods after placing orders approving the whole trading conditions.
If you plan to buy political risk insurance, it will be helpful to know more about it, so that you can opt for the best suitable one for your trading or manufacturing enterprises. After all no one likes to spend money on wrong kind of insurance and regret later.
The kinds of political risk policy cover:
- Nationalization or confiscation – Under this kind while the Government passes an order of acquiring your privately owned property used for trading purpose for public usage purpose then you can protect your losses. Nationalisation means when the whole production Company is undertaken by the Government. In simple words, your private assets meant for business purposes is undertaken by the authorities for benefits of public or the country then you can claim the loss.
- Inconvertible currency – Sometimes in crucial economic times the current currency value declines and it is no longer used in economic transactions. It can’t be exchanged with any other country’s currency.
- Barring of certain products to be exported or imported. You never know when Governments due to some factors will stop exporting or importing certain goods or stop trading with a specific country. You may have placed order and even have done advance payment, and thus you will face loss.
- Political insecurities – This happens when there is prolong strike or violence resulting in difficulty in your trade or had to be totally stopped.
- Failing to fulfil the contract – Unfortunately the Government isn’t able to fulfil the conditions of the contract that ultimately have adverse effect on your Company’s productivity and profitable income.
Any such undesirable situation can’t be predicted, this it will be beneficial to have political risk coverage from well reliable and highly credible sellers of such insurances such as nichetc.com.au.