INTERNATIONAL INSURANCE
     COVERAGES/EXPOSURES

Foreign Coverage is needed by companies that conduct business overseas. This includes importers and exporters. To qualify, you must be a U.S. commercial business selling, traveling or consulting overseas.

Examples of Overseas exposures:

1. Export/Import

a. Sales overseas

b. Exhibitions or trade shows

c. Overseas Licensing

d. Overseas Salesmen

e. One source of products

f. Transit or shipments

2. Sell Services Overseas

a. Contracting services

b. Consulting services

3. Manufacturing Abroad

a. Overseas facilities

A single policy is all that is needed for all coverages. When purchasing a policy, at least 2 of the coverages available must be included. A list and brief explanation of these coverages follows:

Premises & Product Liability

This is broad coverage, protecting spouses, employees and vendors. It also covers newly acquired organizations for 90 days. This provides for defense, settlement and investigation into suits involving bodily injury, property damage, personal injury and advertising injury. Suit must be brought outside the United States and Canada.

Automobile Liability

Covers for owned, hired and borrowed cars when overseas. Admitted Auto liability insurance carriers overseas have very limited coverages. This coverage is broader and provides greater limits which are stated in familiar language. This provides primary and excess auto liability limits.

Workers Compensation and Employers Liability

Unless coverage is mandated by a Federal statute such as the Defense Base Act, International Workers Compensation insurance is a voluntary but necessary purchase. This is intended to cover staff traveling and permanently working overseas. Although these employees may be covered by the domestic workers compensation coverages, they may not be covered in whole while working in a foreign country. The foreign worker's compensation endorsement is not available in New Jersey. Under the International Policy, coverages:

1. Are primary

2. Are 24-hours per day when traveling abroad

3. Do not exclude terrorism, civil war or war

4. Provide 24-hour endemic disease coverage

5. Provide worldwide Employer Liability protection

6. Provide repatriation expense

Property including Transit

This covers samples or equipment in the possession of a salesperson and inventory either in transit to or within the foreign country. Ocean marine will not cover these items while either in transit or when on exhibition at trade shows. Business personal property and real property coverages are also available.

Confiscation and Civil War

Anyone who has goods abroad runs the risk of having them confiscated by foreign governments in certain situations or damaged/destroyed in a civil war. This coverage covers the insured goods that are being stored, exhibited or transported with foreign countries. The insured will be covered against direct physical loss of his goods.

Kidnap and Ransom

Media reports of the kidnapping of businessmen traveling or working abroad underscore the importance of having adequate insurance to meet possible ransom demands. This coverage provides for expenses incurred in negotiating the release of hostage or in making payments demanded in other types of extortion cases.

Crime

The risk of employee theft, loss of money and securities on foreign premises or in transit abroad and depositors forgery exists. Crime coverage protects you against these exposures. It also allows you to offer your inventory records and physical counts to support the amount of loss claimed when there has been a loss through employee theft.

Business Interruption

The package can protect against loss through loss of foreign royalties coverage. This coverage protects against the second contingency through loss of income coverage. This also protects you against the extra expenses you incur in continuing your business after suffering physical loss or damage to his own property. You can also be protected for contingent business income from physical loss or damage to your supplier's property.

Listed below are examples of claims that have occurred during overseas travel:

Premises Liability: A U.S. businessman, while staying in a hotel in China, negligently caused a fire while smoking in bed. The fire resulted in the death of ten individuals and extensive hotel damage. The U.S. businessman was brought to trial in China on both criminal and civil charges. After a lengthy and costly trial, he was sentenced to 18 months in prison and was ordered to pay $52,000 in damages.

If the U.S. businessman has had an International General Liability policy, any bail bonds, civil court costs and resulting civil penalties may have been paid under this coverage. Domestic CGL policies would not have responded because of territorial limitations on the policy.

Products Liability: A U.S. manufacturer of acne cream products had worldwide sales. A woman in South America suffered eye irritation, the cause of which was traced to the U.S. manufacturer's product.

The claim was settled before it went to trial. However, had it resulted in a suit, the policy would have paid the defense costs and any resulting judgements against the manufacturer.

Difference in Limits and Conditions: An insured, while on business in Korea, rented an automobile and accidentally struck and seriously injured a pedestrian.

The local liability policy on the rented vehicle provided $50,000 in limits. The non-owned/hired automobile liability portion of the policy paid damages which exceeded $50,000. Under the supplementary coverages, the company also paid for the insured's bail bond. There was no coverage provided under the local policy.

Endemic Disease: An individual with Foreign Voluntary Workers' Compensation coverage contracted malaria while installing satellite dishes in Africa. Originally, the insured was incorrectly diagnosed and treated for hepatitis. Eventually, a correct diagnosis of malaria was reached and the disease was cured.

Both hepatitis and malaria are considered endemic diseases; that is, they are common to particular regions of the world. The state of New Jersey offers coverage for occupational disease, but may not cover endemic disease. The company paid this claim, as the Exporter's Package is designed to cover endemic disease. The company also paid for medical expenses until the insured was cured. Domestic Workers' Compensation probably would not have responded to such a claim.

Protection of Experience Modifier: An insured temporarily in Mexico on business accidentally shut his finger in a taxi cab door, resulting in the finger being severed.

The insured's medical expenses were paid for by the company through the Foreign Voluntary Workers' Compensation coverage. In so doing, The insured avoided filing the claim through the state Workers' Compensation Board, not knowing if the claim would be approved or when the decision would be made final. In addition, the insured prevented the claim from negatively affecting their domestic workers' compensation experience and, hence, protected their domestic experience modification.

24-Hour Coverage: An individual, while temporarily working in Haiti, was killed in a late night auto accident.

The widow of the deceased filed a Worker's Compensation claim against the State of Florida, which was denied since the accident occurred after business hours, and the employee was deemed not to be within the scope of his employment. If this individual had had Foreign Voluntary Workers' Compensation coverage, full death benefits would have been paid to widow by the company.

If you determine that you have such exposures, then you should obtain International Insurance.

The following are examples of what can happen to U.S. companies when liability suits are brought overseas and their domestic coverages do not respond:

1. The Company's assets can be impounded in the form of:

a. Accounts Receivable

b. Demonstration Floaters

c. Salesmen's Samples

d. Work in Process

2. A manufacturer can be denied access to the market and therefore, all his future earnings.

3. Distributors may be forced to pay judgements:

a. In turn a suit may be brought against the U.S. manufacturer in the U.S. by the distributor.

b. Distributors can use their contacts to alienate the U.S. corporation with the local market {within the European common market}.

4. The U.S. Government may be asked to enforce the principle of law known as Comity thereby forcing the U.S. corporation to respond to a foreign judgement.

Outlined below are common differences between the coverages under the international policy and many domestic carriers' general liability, automobile and workers' compensation policies:

 

EXPOSURE DOMESTIC CGL FOREIGN COVERAGE Executive or Covers overseas Policy territory is salespersons traveling occurrences only if worldwide {except U.S.} overseas; products or original suit is & coverage provides for services sold overseas brought back to the suits both foreign & United States those brought back to the U.S. If you have above mentioned exposures, you may also have exposures in: Personal Injuries Not covered outside Covered the U.S. Advertising Injuries Not covered outside Covered the U.S. Use of Independent Not covered outside Covered the U.S. Contractors Liability Not covered outside Judgement rated which the U.S. generally results in less expensive coverage Executive or Covered by local Covers for difference salesperson rental vehicles' in conditions as well temporarily traveling insurance coverage as difference in overseas who rent auto in accordance with limits. locally local requirements. NOT COVERED by domestic BAP Executives or Limits of coverage Includes supplementary salesperson assigned may be low. payments provisions overseas purchased such as bail bonds. auto locally or long-term lease auto. Local auto coverage Pays excess over local accordance with of policy. statutory purchased in requirements {limits coverage up to limits can be as low as $25,000} NOT COVERED by domestic Business Auto policy. Executive or Covered only in 24-hour coverage on salesperson traveling scope of employment. temporary travelers. temporarily outside the U.S. Executive or Not covered. Covered within the salesperson assigned scope of employment. outside U.S. for a period greater than 6 months. Repatriation expenses Not covered. Coverage included at no additional charge. Employer's Liability Covered Covered Employment of third Not covered. Coverage offered/ country national. additional charg Chances of being in an Affects domestic Will not affect accident outside U.S. experience if claim domestic experience are three times paid by domestic modifier. greater. carrier. Contraction of an May only cover Covers occupational as endemic disease when occupational well as endemic traveling outside U.S. disease. disease.

NOTE: Temporary travel implies a period not longer than six months.

Underwriting, loss control and claims services are immediately available around the world. Therefore, if a loss occurs there is a company representative available wherever you may be to help you.

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