Posted: 06.16.2005
Insurance for physical assets and personnel in other countries is very different from domestic coverages.
By Phillip M. Lyon
Progressing from conducting business from a base in the US to having a facility abroad can be a great step for business development, but is not as simple as leasing a factory and setting up shop. Besides having to deal with currency fluctuations, foreign labor issues and cultural differences, you also will have to manage insurance issues far more complex than you may have imagined.
Unlike the broad language of policies honed by our competitive market of multiple insurers, many countries are far more regulatory and restrictive. For instance, when you placed that call center in India, did you realize that the only insurance that will be valid is that issued by the monopolistic Indian government? Or, if you operate in Africa, you must be aware of insurer insolvency? Even if you purchased an International Exporters Policy when you started traveling to foreign lands, don't let that offer you a false sense of security.
Insurance for physical assets and personnel in other countries is very different from domestic coverages. Policy forms typically provide far less coverage, and often local premiums are expensive and contain separate taxes and fees. Besides varying by country, these policies often require a Difference in Conditions policy to be placed to bring them up to an acceptable level that will let you, the owner, sleep worry-free.
It can all be so confusing. For instance, you rent a car in France to conduct business and decide to tour Germany on the weekend. You bought insurance at the rental car counter and left on your sightseeing tour. Did you read the policy? Territorial restrictions are common in French auto policies, so you better not be involved in an accident across the border.
What about a German property policy that typically excludes theft during and after a fire? If thieves started a fire while robbing a circuit board manufacturer, there would be no coverage for the theft. Another common exclusion in many countries is an exclusion for spontaneous combustion. For example, a windstorm claim could be denied because of improper maintenance on the roof.
If all of this is not enough to keep you home, consider that by failing to purchase insurance coverage from the locals in some countries, you also could be sentenced to jail and may incur a hefty fine. In Mexico, for example, you could be imprisoned for between 6 months and 6 years; in Taiwan for 7 years, or in Argentina you could be fined 25 times the annual premiums in fines.
There is a big world full of great opportunities out there. With our resources, guidance and international connections, we can help you to take advantage of what it offers while protecting you from potential hazards.
