A decade ago, “doing business internationally” was mostly a large-company concern. Today, a manufacturer in Cranston shipping parts to Ontario, a Providence software firm with a rep who flies to London twice a year, or a Warwick engineering firm bidding on a Caribbean project could be considered international businesses.
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Some middle-market owners assume their commercial general liability (CGL) policy covers them no matter where a claim arises. In reality, the standard CGL form most U.S. carriers use typically limits “coverage territory” to the United States, its territories, Puerto Rico and Canada. A lawsuit filed in Germany, Mexico, Brazil or the U.K. often falls outside that definition entirely, regardless of how minor the company’s presence there might seem.
It doesn’t necessarily take a foreign office to create foreign exposure
Business leaders sometimes equate “international risk” with having an overseas subsidiary or plant. In practice, potential exposure can show up in more ordinary ways:
● An employee traveling to a trade show, client site or vendor audit abroad is injured, or injures someone else, on the trip.
● A product made in Rhode Island is sold through a distributor and causes property damage or injury overseas.
● A foreign customer or government contract requires proof of locally admitted insurance before work can begin.
● A remote employee or contractor works from another country, and a work-related dispute or injury arises there.
● A company’s website or e-commerce platform generates sales, and legal exposure, in a country where it has no physical presence at all.
Any of these could potentially trigger a claim that a domestic CGL, umbrella, auto or workers’ comp policy may not respond to.
What a foreign liability program does
This is the gap that foreign, or international, liability coverage is designed to address. Depending on a company’s footprint, that can look like:
● Difference-in-Conditions / Difference-in-Limits (DIC/DIL) coverage, which sits alongside the domestic policy and extends similar protection outside the standard coverage territory.
● A foreign package policy, bundling general liability, property, auto and sometimes workers’ comp for a country or region where a company has ongoing operations or contracts.
● Locally admitted policies placed through an international carrier network, satisfying a foreign requirement for in-country coverage while a U.S. master policy coordinates limits and claims.
● Voluntary foreign workers’ compensation for employees who travel or are stationed abroad, since domestic statutes generally stop at the border.
Where this can get missed
● A contract with a foreign customer includes an insurance requirement — specific limits, an admitted-carrier clause — that no one flags to the broker until after the deal closes.
● Leadership assumes that because the company doesn’t manufacture overseas, its exposure stops at the water’s edge.
● A company treats small international risks as “not worth the premium,” without pricing out what a foreign lawsuit costs to defend.
A short list to work through
A useful exercise is to map out, in plain terms: where employees travel for work; where products, services or software are sold or used, even through a distributor; whether any contracts carry foreign insurance or admitted-carrier requirements; whether anyone works remotely from outside the U.S.; and whether a foreign office or subsidiary is on the horizon.
Walk through and explain your exposure with a broker who has access to an international carrier network. A modest DIC/DIL endorsement may cover the occasional overseas trip; a company with recurring foreign contracts may need a dedicated foreign package program instead.
The bottom line
Globalization has moved further down-market than some middle-market leaders realize. A company doesn’t necessarily need a factory abroad to have international liability exposure — it may just needs a customer, an employee, or a contract there. Reviewing that exposure before a claim happens, rather than after, is important.
If your business has international exposure, or you’re unsure whether it does, reach out to Peter Gillespie in our Providence office to walk through your risks.
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