Today’s global economy finds many U.S. companies taking advantage of international opportunities of success. While these ventures can broaden the customer base and increase profit, they can also expose the companies to many risks. Even as politicians cast shadows of uncertainty over the business environment, there are some predictable constants that companies can depend within U.S. borders. This partly explains why nearly all companies have adequate domestic insurance coverage and none internationally.
International business insurance provides coverage that addresses the exposures and risks associated with conducting business outside the country. With a basic policy, companies can have general liability, auto and workers’ compensation coverage. However, each foreign country has its own set of requirements, coverage, limits and legal liabilities that should be considered before buying a policy. Pitfalls that companies want to avoid include currency valuation, local customs, political considerations and language variations.
For companies that employ workers, international insurance satisfies requirements set by local governments. In most cases, coverage limits are lower than companies can expect in the U.S and could create a shortfall if a major claim is filed. For the workers’ interest, having international insurance coverage for workers compensation can protect them from issues such as a lost passport or disease.
Some companies either do not realize they need international business insurance, or make the mistake in assuming that this type of policy only applies to very large corporations. Thanks to the Internet, small, medium and large companies can operate globally. Therefore, the need for international business insurance is not based on organization size, but rather, is based on business dealings.
Frequently, companies do not recognize the exposure involved with operating in a foreign country. For example, a company might only sell products domestically but may have representatives who travel outside of the country.
Other companies might be aware of certain exposures but do not know an insurance product is available to cover those risks. Still, there are companies that believe their general liability policy covers everything inside and outside U.S. borders.
Business insurance policies purchased in the U.S. carry specific guidelines on the terms and conditions, and coverage territory. Workers compensation policies, for example, usually covers employees on a state-specific basis. Coverage is only available while on the job and not while employees are outside the country. Typically, general liability policies will only cover domestic claims.
For its part, the insurance industry is providing products for companies doing business overseas. Several major providers offer international business insurance. In addition, companies can get locally admitted coverage when it is required in certain countries.
Locally admitted coverage refers to policies issued by licensed insurance providers authorized by foreign governments. Generally, these providers can provide coverage in a local jurisdiction or county and respond to claims. In addition, U.S. companies will have the right to defend themselves in a foreign court with a locally admitted policy.
There are many different types of international business insurance policies. Most mirror domestic policies in protecting companies from unforeseen circumstances related to business operations. Of course, the difference is that these policies are for incidents that occur within a foreign country.
Incredible demands are placed on business travelers in today’s global marketplace. Notwithstanding this fact, many organizations and companies are unaware of limitations with U.S. insurance policies. International commercial products can reduce the risks of doing business outside the U.S. when a claim or lawsuit is filed in a foreign country.
Foreign Voluntary Workers Compensation
Expatriate employees and volunteers can be covered for claims through a foreign voluntary workers compensation policy. Whether temporary or permanent, endemic disease and frequent returns to the covered person’s country of origin are included in the coverage.
This gives added protection since U.S. workers compensation does not apply to foreign claims. Most policies include a $1 million per occurrence limit for employer liability for accidents or diseases.
Group and Individual Coverage under the Defense Base Act
Companies awarded a U.S. government contract must obtain insurance under the Defense Base Act. This type of policy covers subcontractors and employees who must work outside the United States to fulfill the contract. There are stiff penalties for companies that fail to obtain DBA insurance. Additionally, lack of coverage creates the possibility of also facing serious liability issues if something happens to anyone employed by the company.
Comprehensive Group Health
Multinational companies can benefit from having a comprehensive group health plan for U.S. citizens living overseas, as well as foreign nationals working for the companies. Basically, this type of policy provides a U.S.-style health benefit program that is generally affordable enough to place all international employees under one plan. Administratively, having an equal group health plan for citizens and noncitizens is much easier to manage. Coverage is portable, which means that transferring an employee to a different location in another country does not lead to a disruption of coverage.
There are also coverage options that can be added based on locations and company needs. Some of these may include:
Blanket International Group Medical Insurance
Blanket international group medical insurance offers customized options for any corporation or organization that has group members or employees traveling to a foreign country. The time period can be short-term or long-term where health services abroad are not usually covered by domestic policies. In addition to basic coverage for health issues, this plan also provides supplementary coverage options similar to those under a comprehensive group health plan.
Group and Individual Business Travel Accident Insurance
Any employee benefit program for companies that have employees regularly traveling outside the country should include business travel accident insurance. Customizing this type of policy for group and individual travel is designed to offset associated risks if there is a loss of a key employee or group of employees. Coverage for war and acts of terrorism are usually part of this policy. Some polices can also provide compensation to families for loss of income when there is an accidental death or permanent disability.
Special Risk
Special risk polices offer affordable, flexible protections that can integrate with existing benefit programs. Companies can tailor coverage to alleviated financial consequences if an employee or group member is injured. Coverage gaps from a general liability plan, business travel accident or international medical are filled with these policies.
Foreign General Liability and Employers’ Liability
Generally, an employers’ liability insurance policy provides protection for organizations and businesses that face legal actions from events that take place outside the United States. Policy amounts may vary based on need and the amount a carrier offers. A typical policy may have $1,000,000 per occurrence limits with an aggregate limit between $2,000 and $5,000,000.
Foreign Commercial Auto Liability
Purchasing, leasing or renting vehicles for employee use also requires commercial auto liability insurance. Just as protecting the health and well-being of employees, it is important to financial interest against lawsuits stemming from harm to others.
Foreign Commercial Property/Premises Liability
Real and personal property, transporting property, property at exhibitions and business interruption come under a commercial property/premises liability policy. International companies that have multiple property locations will need this coverage.
Kidnap, Ransom and Extortion
Political or geographical hot spots increases risk exposure for representatives of domestic companies and organizations. The benefits of a kidnap and ransom insurance policy includes access to crisis management and negotiation teams working towards a positive outcome.
A similar policy offered by international insurance carriers is political risk and evacuation. People, financial assets and property are covered if political instability or violence arises.
More frequently, foreign countries are trending towards similar laws and litigious practices of the United States. In some cases, executives of foreign companies can be held personally liable for situations that leave employees or others unprotected. Having proper international business insurance coverage can help organizations and companies avoid asset losses whether in people or finances.
