Regardless of the size or industry, U.S. based companies that travel or do business outside the U.S. face risk when:
The standard business insurance policies that are sold in the U.S. do not cover many of the exposures to lawsuit or employee injury that may occur outside of the U.S. In addition, overseas jurisdictions often require policies and extensions that only international carriers provide. For this reason, many U.S. companies with foreign exposures buy a Foreign Package Policy that contains a number of coverages such as Foreign General Liability, Foreign Contingent Business Auto, Foreign Voluntary Workers Compensation, Foreign Property, Kidnap And Extortion, Accidental Death & Dismemberment, and Emergency Travel Services. The minimum premium for a Foreign Package policy can be as low as $2500.
U.S. based manufacturers, distributors, and other firms doing business overseas face the following perils:
Manufacturers and distributors that sell products outside of the U.S. may be sued in foreign jurisdictions and as a result will need Foreign General Liability coverage. A U.S. based General Liability policy only covers lawsuits for foreign injuries that are filed in U.S.. For this reason, a manufacturer or distributor sued in a foreign jurisdiction will not have adequate insurance coverage. Why does this matter? Once a judgment is filed in a foreign jurisdiction, the manufacturer or distributor may face the following perils: 1) assets in the foreign country may be seized to satisfy the judgment, 2) may be prevented from doing business in the future in the foreign country, and 3) it is possible that a long arm statute exists that may allow the foreign judgment to be satisfied in the U.S. from U.S. assets.
Manufacturers and distributors that own or rent offices or have operations (ex: meetings, demonstrations, trade shows, manufacturing, installation, etc.) outside of the U.S. can also be sued in foreign jurisdictions arising out of the ownership or rental of office or other premises (ex: slip and fall or fire damages landlord’s building) or resulting from their operations. Foreign General Liability coverage may also cover these exposures.
Employees who are temporarily outside of the U.S. may be injured on the job and may need a special type of coverage for emergency evacuation to adequate medical facilities, repatriation of remains in the event of death, or coverage for endemic diseases.
Employees who are temporarily outside of the U.S. may also need special Emergency Travel Services to overcome political or language barriers in the event of medical or legal problems.
Employees who are permanently located outside of the U.S. will need Foreign Workers’ Compensation coverages.
Employees who use vehicles outside of the U.S. will need Foreign Contingent Auto Liability coverage to provide limits of protection over and above the minimal limits that are required to be purchased from the rental company in the foreign country.
(This article first appeared in the 2005 edition of The International Comparative Legal Guide To: Product Liability, published and reproduced with kind permission by Global Legal Group Ltd, London. For more information please visit www.iclg.co.uk.)
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