International Exposures - Are You Covered?

When was the last time you reviewed your foreign exposures and coverage? According to government statistics*:

- The number of small and medium-sized U.S. firms exporting goods has more than doubled since the 1990s.
- International trade accounts for nearly one-third of the U.S. Gross Domestic Product.
- U.S. exports accounted for about 25 percent of U.S. economic growth during the 1990s and supported an estimated 12 million jobs.

If doing business abroad is part of your company's growth strategy, understanding the scope of insurance available for international business is critical to protecting corporate assets. Most insurance policies placed in the U.S. provide limited, if any, coverage for losses occurring abroad. The good news is that there are numerous specialized insurance coverages available for companies conducting international business that are specifically designed to provide global protection.

Depending on the extent of the foreign business being conducted, typical coverages that should be considered are as follows:

 Foreign Commercial General Liability coverage is similar to domestic liability coverage; however, it applies to foreign occurrences and includes protection for U.S. occurrences when a suit is brought outside the U.S. or Canada. For example, manufacturers and distributors that sell products outside of the U.S. may be sued in foreign jurisdictions. Typically, a U.S.-based policy only covers lawsuits that are filed in U.S. or Canada.

 Foreign Business Auto coverage provides physical damage and liability coverage for hired and non-owned vehicles operated overseas. Coverage is typically needed for limits over and above the minimum or statutory limits that are required to be purchased from the rental company in the foreign country.

 Foreign Voluntary Workers' Compensation/Employers Liability coverage extends benefits for U.S. employees while traveling overseas or assigned to work outside the U.S. and Canada. Coverage can include medical assistance programs and repatriation expenses.

 Foreign Commercial Property coverage affords protection at unscheduled locations while in transit for laptop computers, sales samples and personal property at trade shows overseas. A more extensive policy may be required for owned or leased facilities.

 Foreign Travel Accident & Sickness coverage provides additional protection in the event of an emergency while traveling overseas.

 Kidnap, Ransom and Extortion coverage is an important consideration; as global commerce grows the risk of kidnapping increases for corporate executives, key employees, wealthy citizens and their families.

 Marine Ocean Cargo offers coverage for international shipments.

 Political Risk covers losses arising from confiscation, expropriation, nationalization/selective discrimination of property by foreign governments or embargo/license cancellation coverage for contracts.

 Foreign Travel Assist coverage is designed to provide employees 24-hour emergency travel assistance services.

It is also important to note that if you are importing products from anywhere outside the U.S., that you have essentially become the manufacturer in the case of a suit from the sale of those products. You may have the ability to be indemnified by your overseas partner providing that product, but it will be your risk management/insurance program that will be the first line of defense for payment of damages. You need to be certain that you have addressed it in your current insurance program so that you are accounting for the cost associated with those import sales appropriately.

Many foreign liability coverages can be purchased together as a package policy and expanded as your business grows. Certain countries can be excluded. Securing coverage from a reputable carrier with international expertise, specialized products and strong global network capabilities will mitigate the risks associated with conducting business in other countries. Please contact Michelle Keller to discuss your foreign exposures and to obtain more information on how we can assist you. ◊

* Bureau of Economic Analysis, U.S. Department of Congress

This Risk Insights is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice.All rights reserved. Content © 2008-2010 Zywave, Inc.