1. Wells Fargo Insurance Services
Expanding internationally?
Check your insurance coverage first
Doug Singer
Business Development Officer
Commercial Insurance Division
Wells Fargo Insurance Services USA, inc.
100 West Washington Street, 4th Floor
Phoenix, AZ 85003-1808
Phone: 602.528.3072
douglas.c.singer@wellsfargo.com

2. Indications that foreign coverage
is 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

3. Expanding internationally?
Check your insurance coverage first
Increasingly, U.S. firms are venturing beyond
American borders to accept work in other
countries. This brings exciting, new
opportunities, but it also creates new and
unfamiliar exposures.
To take on international projects, some firms
collaborate with foreign contingents in joint
ventures or other types of partnerships. Others
form their own foreign operations by creating
legal entities, opening offices, and hiring U.S.
expatriates or local nationals.
Regardless of the approach, firms should
review their insurance program before working
and traveling abroad. If they don't, they'll
discover too late that most standard policies
leave international operations extremely
vulnerable.
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4. The four most common areas of
exposure 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.

5. The practical solution for these four
coverage gaps is a foreign package
policy.
This policy can be designed to cover property outside
of the U.S., provide worldwide liability protection, add
excess liability for auto policies purchase at the rental
counter, and include U.S. workers’ compensation
benefits for U.S. expatriates, cover endemic
disease, pay for medically required emergency
medical transportation to another country, and
provide toll free numbers to employees for medical
assistance. The foreign package policy should be
scheduled beneath the firm’s umbrella
policy, ensuring that excess limits apply to claims
anywhere in the world.

6. Foreign Credit Insurance
When doing business with a Foreign Corporation that is new to
you or when the Foreign Corporation resides in an economically
struggling economy consider Foreign Credit Insurance.
This insurance provides coverage in case of a foreign company
declaring bankruptcy or not paying for products or services
received from you. The underwriting structure is arduous and any
company you are seeking to do business with will have their
financials and procedures reviewed. Any company or firm not
listed on the policy is not covered, making this policy much
different from other insurance policies you carry. Most financial
institutions will require this coverage when setting up credit
lines, or loans for foreign operations.
Ocean Marine Insurance
When Importing or Exporting goods who is providing coverage for
the goods and at what point in the transaction does ownership of
the goods transfer? These questions are always pertinent and
should be set forth in the contract. How are the goods to be
insured, at what value, is Duty included? Many times goods are
shipped using multiple modes of transportation; Ship, Air Cargo,
Rail, Truck. The Ocean Marine contract can be drafted to cover
any or all of these methods. Be certain that you or your agent
understands all of the many facets of Ocean Marine as it is a very
specialized coverage.

7. Additional insurance considerations:
 Professional liability: In addition to general liability, firms
should confirm that their professional liability policies are written
with a worldwide coverage territory and will respond to claims
brought outside the U.S.
 Foreign locations: If a firm has international
operations, securing the right level of coverage can be a major
challenge. For example, most U.S.-based multinationals try to
protect their global operations with worldwide insurance policies
written by American carriers. These policies typically offer
centralized control and uniform coverage, limits, and deductibles
for exposures around the world. However, if U.S.-based coverage
is the only insurance, the coverage may be insufficient.
That's because, in insurance terms, U.S.-based global policies are
considered non-admitted insurance by regulators outside of the
U.S. As a result, many countries do not allow these policies to act
as legal insurance within their borders. Ultimately, if a company
suffers a loss or has a claim against it in another country, its
global insurance carrier may not be able to respond on its behalf
because the policy is considered non-admitted. For instance, the
insurer may not be able to directly defend the insured, post a bail
bond, or otherwise pay for settlements or judgments.
Even more, when the global policy pays the claim in the U
S, transferring the money to the international subsidiary could be
considered a capital infusion, taxable by the local government.
Plus, relying solely on a U.S.-based policy may lead to
fines, penalties, and tax liabilities because the U.S.-based insurer
is not recognized as a legal insurance carrier by the foreign
insurance regulator.
 Compulsory requirements: Some countries have compulsory
insurance requirements to ensure companies are covered for
certain events, such as industrial or workplace accidents. And
even if a country allows non-admitted insurance, a U.S.-based
policy will not meet the local requirements for compulsory
insurance. Instead, if a firm has international operations, it must
make sure the design of its insurance program keeps the
international entities compliant with each country's insurance and
tax regulations.

8. International checklist for
Working overseas companies
Some 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.

9. “All business proceeds on beliefs,
or judgments of probabilities,
and not on certainties.”
− William Hewlett
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10. Thank You!
Questions & Answers
© 2012 Wells Fargo Insurance Services. All rights reserved. Restricted.
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