As the business world continues to expand with more businesses operating globally (in some form or another) than ever before, attention to an insurance policy coverage territory has never been more imperative. Reviewing the coverage territory clause on a policy, however, may not provide the complete picture.
Just yesterday, while reviewing a hybrid E & O/Cyber Liability insurance policy for a technology firm, I came across a split defense clause in which the duty to defend provision was geographically dependent. The carrier’s duty to defend only applied to claims made in the U.S., Canada, or Puerto Rico. For all other covered claims, the carrier would reimburse the insured for its defense expenses. Further confounding was the excess policy, which contained a “limited territory endorsement” limiting coverage to claims made or suits brought only in the U.S., Canada, or Puerto Rico. Unbeknownst to the insured, the primary carrier’s duty to defend and the application of excess coverage were geographically dependent on where the claim is made.
As businesses expand globally and grow more sophisticated, their insurance policies may not be conforming and adjusting at the same rate. Investing time and resources into analyzing insurance policies to ensure they are accurately addressing an ever-expanding exposure, may prove to be a wise investment.