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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.
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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.
In addition to added coverage, there is usually a financial benefit in a foreign package. Normally, the rate charged for foreign sales under a domestic general liability policy is significantly greater than that on a foreign general liability policy. The rate is usually less because the legal climate outside the U.S. coverage territory is less favorable for injured parties filing lawsuits in foreign jurisdictions versus the U.S. legal system.
Minimum annual premiums start as low as $2,500 and include general liability limits of $1,000,000 with no deductible. Increased limits of liability are available at a reasonable cost. Like most insurance policies, terms and conditions vary by insurance company, so take your time in choosing the appropriate policy for your business needs.
The following are some significant insurance coverages included on a foreign package policy available to beauty brands, manufacturers, distributors, importers and exporters:
Foreign Products Liability: When your company manufactures and/or distributes products outside the U.S. coverage territory, a foreign liability policy will protect your company in the event it faces a foreign products liability lawsuit.
Foreign General Liability: When your company rents offices or runs meetings, demonstrations or tradeshows in foreign countries, a foreign liability policy will protect your firm for damages or injuries arising from such operations.
Foreign Automobile: Coverage provided for owned, hired or non-owned vehicles outside the U.S. coverage territory. Optional physical damage coverage is also available.
Foreign Voluntary Compensation & Employers Liability: Covers for voluntary compensation (overseas workers’ compensation) and employers liability. Voluntary compensation covers U.S. and non-U.S. employees where U.S. workers’ compensation does not apply. Employers’ liability provides coverage for accidents or diseases contracted outside the U.S.
Foreign Travel Accident & Sickness: Provides coverage for employees while traveling on company business. It can be extended to include spouses and children. Coverage for emergency medical evacuation and family travel expenses are also available.
Foreign Commercial Property: Is available to cover business personal property while on foreign soil. This can include raw materials, components, labels etc. Property coverage can extend to property at an exhibition or while in-transit.
Donna L. Malkasian is the president of Beauty Insurance Consultants, LLC., a member of the Capacity Group of Companies. 1-201-566-5608