This kind of political risk insurance is purchased by exporters, lenders, investors, and contractors with inventories, equipment, or other assets located in foreign countries. It protects against confiscation, expropriation, nationalization, and other foreign government actions which would deprive you of your rights of ownership or control of your assets. Related political risks include forced abandonment, selective discrimination, business interruption, and "creeping expropriation" (a series of individual government actions which, taken together, effectively result in expropriation). This political risk insurance can also cover non-transfer of dividends, royalties, or other funds following your sale of an asset or disposal of an investment.

There are two types of political risk insurance relating to currency risks. One deals with the conversion of local currency into hard currency and the other addresses the ability to transfer hard currency out of the country. Currency inconvertibility and transfer risk policies apply to losses resulting from financial crises, hard currency shortages, or arbitrary political decisions by a foreign government. This political risk coverage protects local currency dividends, debt service, fees, return of capital, or non-payment of trade receivables by a foreign government or private-sector buyer (assuming, in the case of a private-sector buyer, that sufficient local currency had been deposited in the buyer's bank).

This kind of political risk insurance protects against non-payment, loss of income, business interruption, loss of equity investments, or damage/destruction of physical assets due to war, revolution, civil unrest, rioting, public strikes, armed uprising, insurrection, terrorism, sabotage, or other politically-motivated violence or acts of malice.

When you are selling to a foreign government or public-sector buyer, contract frustration insurance (also known as contract repudiation insurance) protects against non-payment or arbitrary non-honoring of your contract, either before or after your shipment of goods or performance of services. Political risks insurance is also available to protect against non-honoring of sovereign government payment guarantees, whether the buyer is in the public or private sector. Other policies can be written to insure against the political risks of non-payment on sales to private-sector buyers, for example to cover your sales to your company's own subsidiary located in a politically risky market.

Exporters, importers, and investors can insure against cancellation of import or export licenses, as well as embargos, boycotts, sanctions, or decrees which could result in business interruption, non-payment of invoices, or other losses.

This kind of political risk insurance is purchased by exporters that put up guarantees, performance bonds, bid bonds, or stand-by letters of credit in support of contracts with foreign government or public-sector buyers. It insures against the buyer's unilateral extension of terms or unfair calling of these kinds of "on demand" guarantees.

U.S. importers that purchase on cash-in-advance terms from suppliers located in high-risk foreign countries can protect against arbitrary contract frustration or non-delivery by a foreign public-sector supplier. This political risks insurance also covers non-delivery by a private-sector foreign supplier due to political events or government actions outside of its control. This coverage applies to losses relating to purchases made on cash-in-advance (pre-paid) terms, barters, tolling contracts, or similar arrangements (assuming no financial compensation in lieu of delivery). It also insures against political risks such as government-supported confiscation of products belonging to the insured party in the country of origin or in transit.