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Foreign Insurance Exposures

By: Donna L. Malkasian
Posted: March 3, 2011, from the March 2011 issue of GCI Magazine.

Business insurance policies sold in the U.S. generally do not provide coverage for many of the exposures that could possibly occur outside of the U.S. coverage territory. In addition, overseas jurisdictions often require policies and extensions that can only be provided under a foreign package policy, which will also provide protection of assets that could be seized, permit for the continuation of future foreign business, and may allow foreign judgments to be satisfied in the U.S.

Purchasing a foreign package policy is not mandatory. but if your company is exposed and extends business operations outside of the U.S. coverage territory, it is certainly advisable.

Examples of Foreign Related Claim Scenarios

A skin care product manufactured by a U.S. firm is sold to a distributor in Spain. A lawsuit is filed in Spain based upon allegations of allergic contact dermatitis. The plaintiff seeks damages from the distributor and U.S. manufacturer. The foreign package policy would respond whereas the U.S. company’s domestic liability policy would not based upon the lawsuit being filed outside the U.S. coverage territory.

An executive of a U.S. based nail care distributor travels to Brazil to visit a new manufacturing facility. On the way from the airport to a hotel by taxi, he is abducted and held for $1,000,000 ransom. A domestic policy would not cover this as there would have been a need to purchase kidnap and ransom coverage separately or have it included it a foreign package policy.

A U.S. based salesperson travels to Italy to meet a potential client. This employee suffers from appendicitis while in her hotel room. She is treated at a local hospital and pays the bill with her personal credit card. Back in the U.S., her health provider refuses reimbursement for extra-territorial medical treatment, however, the workers’ compensation under a foreign package would respond.

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