Council connect, bonus bucks, worldwide insurance policiesDocument Transcript
Wells Fargo Insurance ServicesExpanding internationally?Check your insurance coverage first Doug Singer Business Development Officer Commercial Insurance DivisionWells Fargo Insurance Services USA, inc.100 West Washington Street, 4th FloorPhoenix, AZ 85003-1808Phone: email@example.com
Indications that foreign coverageis warranted: International travel or exhibitions International sales manager International sales (Internet sales?) U.S. employees working overseas International shipments International operations International Third Party Manufacturing
Expanding internationally?Check your insurance coverage firstIncreasingly, U.S. firms are venturing beyondAmerican borders to accept work in othercountries. This brings exciting, newopportunities, but it also creates new andunfamiliar exposures.To take on international projects, some firmscollaborate with foreign contingents in jointventures or other types of partnerships. Othersform their own foreign operations by creatinglegal entities, opening offices, and hiring U.S.expatriates or local nationals.Regardless of the approach, firms shouldreview their insurance program before workingand traveling abroad. If they dont, theylldiscover too late that most standard policiesleave international operations extremelyvulnerable. 2
The four most common areas ofexposure include:1. Property: Before working internationally, firms should make sure their property policy has a worldwide coverage territory. Typically, domestic policies are written to insure property only in the U.S., Puerto Rico, and Canada. So if an employee travels to Asia on a business trip and a laptop is stolen, the property wouldn’t be covered under most U.S. policies.2. General Liability: Laws and potential liabilities are different in other countries. That’s why it’s important to have a general liability insurance that can respond to an event that happens anywhere in the world. In particular, the policy should respond to lawsuits brought anywhere in the world, as an injured party typically files suit in his or her local country, not necessarily in the U.S.. Coverage under domestic liability policies varies by carrier. Typically, policies provide coverage only for events occurring in the U.S. and for claims brought in the U.S., Puerto Rico, or Canada. While some domestic policies do provide coverage for worldwide events, none of them cover lawsuits brought outside the U.S., Puerto Rico, or Canada.3. Auto: The stand domestic auto policy applies to the U.S., Puerto Rico, and Canada. So if an employee rents, leases, or owns a vehicle outside this territory and has an accident, the policy would not provide coverage. Notably, auto rental is a leading exposure for many U.S. firms, due to differences in international driving patterns – from driving on a certain side of the road to reading signs in foreign languages. It’s advisable to purchase liability coverage when renting vehicles outside of the U.S., but keep in mind that some rental car coverage terms can be restrictive. For example, the coverage may not respond if the driver is speeding, drinking, or otherwise in violation of the local law. In addition, insurance limits purchased at the rental counter vary from one country to the next – and from one rental company to the next. What if the car hits a bus or a train? The firm may need umbrella or excess liability limits over the policy purchased from the rental company.4. Workers’ Compensation: When U.S. employees are injured while traveling overseas on short term business trips, the domestic workers’ compensation policy is the first and primary form of coverage. However, the U.S. workers’ compensation policy will not respond if someone is sent on a long-term assignment outside of the country, and there is no definition in the policy for “temporary” or short-term assignment. U.S. workers’ compensation policies exclude endemic diseases, such as malaria or SARS, and do not provide any emergency services for an injured worker.
The practical solution for these four coverage gaps is a foreign package policy.This policy can be designed to cover property outsideof the U.S., provide worldwide liability protection, addexcess liability for auto policies purchase at the rentalcounter, and include U.S. workers’ compensationbenefits for U.S. expatriates, cover endemicdisease, pay for medically required emergencymedical transportation to another country, andprovide toll free numbers to employees for medicalassistance. The foreign package policy should bescheduled beneath the firm’s umbrellapolicy, ensuring that excess limits apply to claimsanywhere in the world.
Foreign Credit InsuranceWhen doing business with a Foreign Corporation that is new toyou or when the Foreign Corporation resides in an economicallystruggling economy consider Foreign Credit Insurance.This insurance provides coverage in case of a foreign companydeclaring bankruptcy or not paying for products or servicesreceived from you. The underwriting structure is arduous and anycompany you are seeking to do business with will have theirfinancials and procedures reviewed. Any company or firm notlisted on the policy is not covered, making this policy muchdifferent from other insurance policies you carry. Most financialinstitutions will require this coverage when setting up creditlines, or loans for foreign operations.Ocean Marine InsuranceWhen Importing or Exporting goods who is providing coverage forthe goods and at what point in the transaction does ownership ofthe goods transfer? These questions are always pertinent andshould be set forth in the contract. How are the goods to beinsured, at what value, is Duty included? Many times goods areshipped using multiple modes of transportation; Ship, Air Cargo,Rail, Truck. The Ocean Marine contract can be drafted to coverany or all of these methods. Be certain that you or your agentunderstands all of the many facets of Ocean Marine as it is a veryspecialized coverage.
Additional insurance considerations: Professional liability: In addition to general liability, firmsshould confirm that their professional liability policies are writtenwith a worldwide coverage territory and will respond to claimsbrought outside the U.S. Foreign locations: If a firm has internationaloperations, securing the right level of coverage can be a majorchallenge. For example, most U.S.-based multinationals try toprotect their global operations with worldwide insurance policieswritten by American carriers. These policies typically offercentralized control and uniform coverage, limits, and deductiblesfor exposures around the world. However, if U.S.-based coverageis the only insurance, the coverage may be insufficient.Thats because, in insurance terms, U.S.-based global policies areconsidered non-admitted insurance by regulators outside of theU.S. As a result, many countries do not allow these policies to actas legal insurance within their borders. Ultimately, if a companysuffers a loss or has a claim against it in another country, itsglobal insurance carrier may not be able to respond on its behalfbecause the policy is considered non-admitted. For instance, theinsurer may not be able to directly defend the insured, post a bailbond, or otherwise pay for settlements or judgments.Even more, when the global policy pays the claim in the US, transferring the money to the international subsidiary could beconsidered a capital infusion, taxable by the local government.Plus, relying solely on a U.S.-based policy may lead tofines, penalties, and tax liabilities because the U.S.-based insureris not recognized as a legal insurance carrier by the foreigninsurance regulator. Compulsory requirements: Some countries have compulsoryinsurance requirements to ensure companies are covered forcertain events, such as industrial or workplace accidents. Andeven if a country allows non-admitted insurance, a U.S.-basedpolicy will not meet the local requirements for compulsoryinsurance. Instead, if a firm has international operations, it mustmake sure the design of its insurance program keeps theinternational entities compliant with each countrys insurance andtax regulations.
International checklist forWorking overseas companiesSome tips for success: Before taking a business overseas, it’s important to thoroughly research the Do your homework about the local operating environment and plan for culture. Just as we expect foreigners to success: understand our culture, they expect us to understand theirs. • Business plan: Develop a comprehensive international business Respect and engage your partners. plan that outlines the goals, objectives, Don’t try to impose an approach. and the game plan for achieving them Be on time. But prepare for others to be • Business licenses and visa: Examine late. local licensing laws and regulations that govern design services Respect celebrations and traditions. • Payment terms and procedures: Manage expectations. Keep in mind that Avoid disputes by developing clear, business protocols, procedures, and the precise payment terms that are tied to overall pace of work are different outside the scope of services of the U.S. • Taxes: The tax implications in a foreign country can be very complex. Remember to comply not only with the host country’s tax laws, but also the U.S. laws and tax treaties • Legal system: Determine which legal traditions are different from Anglo- American common law. In European countries, for example, civil law governs transactions. Other countries may not have a well-developed body of commercial law as they transition to capitalism • Insurance policies: Examine professional liability coverage and other insurance policies to determine whether they adequately cover international exposures.
“All business proceeds on beliefs, or judgments of probabilities, and not on certainties.” − William Hewlett 8