If an investor applies to convert local currency into foreign currency and the host government s central bank not only failed to convert the currency in a predefined time period, but also refused to return the local currency to the investor, the investor would not be able to file a CI claim. In such a case, the currency will have been effectively expropriated. For this reason, CI coverage is almost always purchased in conjunction with coverage of such expropriation of funds. Political Violence 9. While standard property insurance can cover losses due to strikes, riots, civil commotion and perhaps terrorism, damage due to war is usually excluded.
Coverage usually applies to the lesser of repair, replacement, or fair market value.
In addition, coverage for business interruption may be available for net profit lost, and compensates for defaults caused by political violence. Breach of Contract 10. Breach of contract coverage refers to losses arising from a host government's breach or repudiation of a contract with the owner of an insured project. For example, for a power project such a breach may result from failure by a government-owned entity to make payments in accordance with the power purchase agreement between the independent power producer and the user or distributor. For a toll road project, such a breach may result from a government entity failing to comply with the agreed increase in toll levels.