From cyberattacks and phishing incidents, to local regulatory changes and currency conversions, the challenges of conducting business internationally can make it nearly impossible for companies to plan for all the dangers. As we rang in the 2020 new year, no one could have predicted that an unprecedented global pandemic would descend on us in just a few short months.
While it’s impossible to predict the future, a foreign package insurance policy can provide a backstop for a wide range of risks, no matter the scope and scale of a company’s foreign exposure. This type of policy is usually sold as a “bundle” which provides a suite of coverages that protect property, liability and employees against a multitude of known and unknown overseas risks. In addition, many programs can also address the in-country compulsory insurance requirements for businesses headquartered in the United States.
Let’s review some of the common coverages available under a foreign package policy.
Foreign Property
Property coverage under a foreign package can provide a key layer of protection against damage or loss to overseas real and personal property, as well as mitigate any resulting business interruption costs. In analyzing your foreign property risk, it is important to review all contracts, especially those that are signed or executed overseas. Companies must understand where responsibility and liability lie regarding not only the building structure but also any personal property inside those structures.
Foreign Commercial General Liability
Typically, commercial general liability policies only respond to incidents that occur in the United States, Puerto Rico and Canada. Even policies that purport to provide coverage for incidents occurring anywhere in the world are often limited to claims or suits brought in the United States. Foreign general liability coverage is a safety net for third party claims against a company and their employees for bodily injury and property damage occurring overseas, including claims and suits brought in foreign jurisdictions.
Foreign Voluntary Workers’ Compensation
Most workers’ compensation policies only cover employees working in the United States. Foreign voluntary workers’ compensation (FVWC) coverage extends those benefits to the company’s employees while traveling abroad. It can also provide benefits to employees classified as local nationals and/or third country nationals. Keep in mind that most foreign countries require the company to buy into the local workers’ compensation scheme, but FVWC insurance will typically provide broader coverage in the form of difference-in-conditions (DIC)/difference-in-limits (DIL) over the local scheme.
Foreign Employer’s Liability
This coverage protects the company against negligence claims should an employee suffer injury, accident, sickness or death as a result of their work overseas. It is often a minimum requirement for doing business in other countries. Certain countries only require a small amount of employer’s liability coverage, but if an expatriate made a claim in their own country then the compulsory coverage limits may not be enough.
Foreign Business Auto Liability
Many overseas employees are required to drive their own vehicles, rent vehicles from a third party, or drive non-company vehicles to conduct their job duties. In many cases, the coverage purchased to satisfy local country requirements can be inadequate in response to potential liability. Much like workers’ compensation, automobile liability is required in most other countries, but the local limits are far below US standards. Because of this large gap, it is important to have foreign business auto liability coverage which sits over the local scheme (DIC/DIL) to ensure adequate coverage in case of a claim.
Business Travel Accident
This is a specialized type of coverage that addresses accidental death and dismemberment in the event an employee sustains an accident while traveling overseas. Companies that do not have established international operations but regularly send employees overseas can benefit from business travel accident (BTA) coverage. It covers a variety of contingencies including medical costs, emergency evacuation, and security services. Some carriers will even extend this coverage for foreign employees traveling to the United States. It is important to communicate all dynamics of your company’s business travel to avoid gaps in coverage.
Kidnap, Ransom and Extortion
Many multinational companies purchase this insurance to protect their employees working in particularly dangerous countries. However, this insurance is becoming increasingly important in responding to new risks such as threats made by bad actors to harm employees or disclose confidential corporate information. Coverage can also apply to “24 hour” kidnappings whereby the kidnappers seek to hold an employee for a limited time to score a quick payout from that employee’s personal account. Typically, these policies are written on a global basis so no locally admitted coverage is required (like with general liability, employer’s liability and auto liability), but it is important to review the form carefully with your agent/broker to ensure against territorial exclusions that can eliminate coverage in certain countries.
Summary
As stated above, foreign package policies are most often written with a “bundle” approach meaning that one size does not fit all. Coverage terms, conditions and exclusions can vary from one insurer to another. As such, please reach out to your Sequoia Risk Advisor, or connect with them directly in HRX, to discuss your specific foreign exposures and learn how a foreign package policy can be an important addition to your risk management program.
Disclaimer: This content is intended for informational purposes only and should not be construed as legal, medical or tax advice. It provides general information and is not intended to encompass all compliance and legal obligations that may be applicable. This information and any questions as to your specific circumstances should be reviewed with your respective legal counsel and/or tax advisor as we do not provide legal or tax advice. Please note that this information may be subject to change based on legislative changes. © 2020 Sequoia Benefits & Insurance Services, LLC. All Rights Reserved
