Business Insurance - Exports To The United States Of America And Canada
In the UK, there is no legal requirement for you to place your insurance cover with a UK domiciled commercial insurance company
. In reality, this is what normally happens. You arrange your insurance in the territory or location in which you trade. When we get to the large multi-national companies that operate in many different locations, then they will usually have a global insurance package, arranged through one particular insurance broker, but placed through many different insurers.If you are a company that is exporting, or is looking to export, then you may find that your broker or insurer, if you deal direct, is interested in what countries you export to.
There are two main reasons for this. The first reason is that insurers will always want to face a claim, if there is one, on their own turf. This is for no other reason than that courts in different countries operate in different ways. A UK based insurer is more used to dealing with claims through UK courts. As they have experience of courts here, they can better estimate what the likely costs of the claim are and they also know that by using UK based solicitors in UK courts, it is of course going to be cheaper.
It really is as simple as they are more comfortable (and profitable) defending claims on their own soil.
The second reason they are interested is that, different countries have different legal systems. For example, if a child received a toy and was injured playing with it and it was manufactured in the UK, but they lived in a country thousands and thousands of miles away (or even elsewhere in Europe) then there would be significant costs in defending an action. There are not only language barriers but also the costs of actions can be much higher.
This is where we get to the US and Canada. We are only getting used, in the UK to ambulance chasing, no win no fee, solicitors. In the US, they invented this type of lawyer, they are incredibly litigious and claims and counter claims, whether valid or not, are made at the drop of a hat. The main reason for this is money. Lawyers know that they can quite easily get settlements 10 to 15 times greater, in the US courts, than they would in UK courts.
There of course has to be negligence proven, but when the cost of a claim can be so high, there are more out of court settlements.
So, in the UK, you business insurance company wants to know where you export to. If it is the US or Canada, this will either make them decide to charge a higher premium or not provide the cover at all. You can't even decide to take the cover out (for products liability insurance) with an exclusion for North America, and still export. The reason being, that this does not stop a claim being made. US and Canadian courts are not averse to agreeing to actions being granted against a UK insurance policy, whether or not there is an exclusion. If you, the business owner, are knowingly producing or supplying goods which are exported to North America, then you need to have adequate cover in place.
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