Goods cross many borders. Even small brands can find themselves on shelves in different parts of the world and need worldwide liability protection. Brands from foreign nations look to enter and stay in the US Market all the time.
The common theme, expansion of markets to sell more product but is your insurance keeping up with your expansion?
The US legal system has a reputation for litigation, but legal actions are not unique to the US.
Liability Coverage Territory
At the heart of the matter lies the coverage territory. An otherwise covered loss runs into trouble when it occurs outside the coverage territory as defined by your liability insurance policy. Look in the definition section of your policy. We will use standard wording but not all policies are the same. Some insurers may expand upon the definition we use here.
In US liability policies it is common to have listed locations, but the covered territory is much broader.
The coverage territory is first defined by geography and includes The United States of America, territories and possessions, Puerto Rico, and Canada.
The territory includes International waters or airspace but only if injury or damage occurs while traveling between the geographies noted above.
However, the policy will give worldwide liability coverage in these instances:
- Goods or products made or sold by your company in the noted territory.
- Activities of a person whose home is in the territory above and away on a short time while on business for you and
- Personal and advertising injury conducted via the internet.
The suit (which is also a definition) which determines responsibility and damages must be based on the merits of the legal system in the described territory. When not based on these merits the insurance must agree for coverage to apply.
Worldwide Liability Issues
Like many insurance policies, coverage can be included in the base price but only goes so far. This is the case for worldwide liability.
Standard polices restrict where the merits of the responsibility and damages can be determined. This limits the broader coverage afforded goods made or sold from the coverage territory. Your insurer may not agree to an alternative. Currency exchange may further complicate matters.
Discovery across borders is different than between US states so resources and expertise can be an issue.
Worldwide liability only extends for a short time for persons conducting business outside the coverage territory. Short time is not defined in the policy, so it is unclear how long is too long. The policy will not respond to premises rented or owned outside the territory.
The standard liability policy will not cover employer responsibilities (workers compensation can also have a territory restriction) and rented autos are another problem.
Knowing where insurance will and will not apply can be complicated but here is a clue. If another insurance policy exists to cover a particular risk, then chances are good coverage in any another policy type is either non-existent or very limited. Insurance has options just like a car. More features typically require more premium.
Such is the case here. Foreign liability insurance is an option for US companies in need of more flexibility. Standalone policies can complement existing insurance programs.
For companies that expand their physical presence another alternative is an international insurance program. International insurance starts with a US presence and builds in foreign operations. Some countries require coverage, for certain lines of insurance, to be placed with “admitted” insurance companies.
International programs have large networks of providers that can coordinate US coverage with admitted options.
These types of programs can be very useful if employees, vehicles, and property are in countries beyond US borders.
Risk, legal actions, and insurance are not uniform throughout the world. Insurance is not a typical purchase in some nations but very common in others. Knowing your insurance borders and how they can be expanded to meet your needs will require assistance.