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My question has two parts.

How can I insure cash abroad? I looked at travel insurance but this focuses mainly on medical and cancellations. If I am mugged on the street, is there any way to claim this money back?

Is my money in my bank account insured? I have read stories about 'express kidnappings', where they hold you until they can empty your bank account. Can I expect to recover the money stolen?

I am from UK if that makes any difference; and I will be travelling to south america.

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No, you cannot insure cash. To what extend your bank account is insured depends a lot on your country of residence and on your bank policies. In the US, credit card accounts are better protected from theft than debit card accounts. –  R-traveler Sep 1 '13 at 17:57
    
@R-traveler This is not correct. You can insure theft of cash within a travel insurance. –  uncovery Sep 2 '13 at 6:54
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2 Answers

up vote 4 down vote accepted

Yes, it is definitely possible to insure cash theft within a travel insurance policy. I would recommend however that you minimize the cash you have on you, and document clearly your cash flow through receipts from banks, money exchanges and ATMs to prove that you had the cash on you.

Regarding the express kidnapping, there are insurance policies existing against this. Since those things happen especially in certain countries (Mexico, Brazil for example), it might be wise to insure against these if you have to go to these countries. I would not think that it is worthwhile getting such special insurance for other countries such as in SE Asia where this does not exist.

You might have to look around for companies who insure against these specific issues, since UK citizens might be a much smaller market for express kidnapping insurance than for example US citizens living near the Mexican border. So to find a company that offers this in the UK might be difficult. It would be wrong however to say that such insurance does not exist. I would also doubt that this is automatically covered by your bank.

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I've known six people who were "express kidnapped" in Mexico City in two separate incidents many years apart. Only one among them was American and he was half American half Mexican. So the kidnappers target anybody. But I hadn't heard of the insurance against it so I have no idea who that is and isn't marketed to. –  hippietrail Sep 2 '13 at 9:34
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@hippietrail I never said that certain people are less at risk in Mexico. I said that UK insurances have less customers traveling there, so that they might not offer such special insurances. –  uncovery Sep 2 '13 at 9:42
    
Yes it wasn't entirely clear what you were saying but that's what I assumed. Hopefully it's a bit clearer now since my edits too. –  hippietrail Sep 2 '13 at 9:44
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You have quite some angles to your question. You can insure cash, but not all of these solutions would cover you in case you are "kidnapped".

  1. There are of course the Traveler cheques I used them a lot before internet cafe's started to be default at almost any touristic location. I haven't used them for while due the hefty fees involved using them. A quick check at the website of my banks shows that they still being sold. If you lose the cheques you will get new ones sent to you almost immediately.
  2. As it is already said in the comments, you bank might have additional security measurements in place. The moment I report my credit and debit card to be stolen or lost, all transaction following will be covered by the bank.
  3. The measurements would not help you in the case you are kidnapped. I could be wrong but I prefer to trust the world a bit more. If I would get into such a situation, I would consider getting my money back the least of my problems. But again, I could be wrong. A possible counter measurement is to work with shadow bank accounts. You just have a bank account filled with some cash. This bank account could then act as an account to be "robbed", while you keep the details of your actual bank account hidden. You don't need to have much money on it. You wouldn't be the first with only 100 euro remaining on their bank account while backpacking, so it is a legitimate story to tell to kidnappers.
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Its not that I don't trust the world, Brazil is my first stop on a world tour and I don't want anything ending my trip prematurely, I thought it might be wise to insure against losing my money through any means –  Awalias Sep 3 '13 at 14:26
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