Standard product liability insurance policies typically limit coverage to the U.S., Puerto Rico, and Canada and usually require that any lawsuits be filed there, even if the injury occurred abroad. To get more thorough international protection, you may need a “worldwide” endorsement (like CG2422), a standalone foreign liability policy, or a controlled master program if your business operates internationally at scale.
E-commerce platforms have opened up an entire world to businesses, but going global with your products can present various challenges, including shipping costs, foreign labeling laws, and product liability. Some sellers worry about whether their product liability insurance will respond if something they sold injured a customer in another country or failed to comply with international labeling standards.
When choosing product liability insurance for overseas sales, be sure to ask:
- Will your insurance protect me from international claims and lawsuits?
- If I’m sued, who will represent me in that country?
- If I have a judgment against me, who will pay the claim?
Delving into policy limitations and possible solutions can help you understand product liability coverage for foreign business exposures and find the right policy to protect you wherever your products go.
What Does “Coverage Territory” Mean, and Why Does It Matter in Product Liability?
General liability and product liability insurance policies will designate a coverage territory in the policy definitions. The coverage territory outlines the geographical area the insurance policy will cover when certain events take place.
Many insurance companies use a standard liability policy form published by the Insurance Services Office (ISO). Because insurance companies widely use the ISO liability policy language, let’s evaluate this policy’s “coverage territory” definition and how it specifically affects product liability coverage overseas.
There are three parts of the coverage territory that determine if the policy provides product liability coverage:
- The geographical area of coverage
- Where the goods and products are made or sold
- Where the lawsuit is filed
Understanding how these three pieces work together is key to knowing what your product liability policy is built to cover.
What Countries Does a Standard Product Liability Policy Cover?
The “coverage territory” in a product liability policy typically means the United States of America (including its territories and possessions), Puerto Rico, and Canada. This is the initial geographical area. If any claims occur outside this area, the policy typically will not cover them.
To expand coverage beyond Canada, the U.S., and its territories, you may need to add an endorsement to your policy or seek a different type of insurance policy, like foreign liability or a controlled master program — more about this later.
Does Product Liability Insurance Cover Products Made Outside of the U.S.?
The standard ISO policy expands the geographical area to “all other parts of the world” if the injury or damages occur from goods or products made or sold by you — the insured — in the United States, Puerto Rico, or Canada.
Suppose you have a product made in China but sold from the United States to a consumer in Australia. If your product injured the consumer, would your policy cover you? Possibly. Here’s why:
- The product was sold by you in the coverage territory – the United States
- Australia is considered “all other parts of the world.”
To determine if a policy would cover it, you would still need to consider the specifics of the claim and where the suit is filed. If the suit is filed outside the U.S., it may not be covered by the policy. Consulting with your insurance provider about specific risk scenarios can give clarity to how your policy would (or would not) respond in a certain situation.
How Does Where a Product Liability Lawsuit Is Filed Affect the Coverage?
The standard ISO policy states that damages in a suit must be determined on the merits in the United States, Puerto Rico, or Canada. In other words, if your product injures someone in Australia, the suit for damages needs to be brought in the United States, Puerto Rico, or Canada. The ISO liability policy does not provide full worldwide coverage; it offers limited worldwide coverage.
If you conduct business outside the United States, the standard ISO policy may not provide the product liability protection you need. There are solutions available that can provide coverage for foreign exposures:
- Amendment of Coverage Territory – Worldwide Coverage (CG2422)
- Policy with “Worldwide” verbiage in the Coverage Territory
- Foreign Liability policy
Each of these endorsements and policies expands international product liability coverage, but in different ways. Here’s how a standard policy, the CG2422 endorsement, and a standalone foreign liability policy compare.
Coverage Territory: Standard vs. Endorsed vs. Foreign Liability
Swipe →
| Standard ISO Policy | CG2422 Worldwide Endorsement | Standalone Foreign Liability Policy | |
|---|---|---|---|
|
Geographic Scope |
U.S. (including territories and possessions), Puerto Rico, and Canada — extends to “all other parts of the world” only if the product was made or sold by you in the U.S., Puerto Rico, or Canada |
Anywhere in the world, except countries under U.S. trade sanctions or embargoes |
Anywhere in the world; built specifically for businesses with ongoing international operations |
|
Where the Suit Must Be Brought |
The lawsuit must be filed and decided in the U.S., Puerto Rico, or Canada — even if the injury happened elsewhere |
No U.S./Puerto Rico/Canada suit requirement; claims can be handled where they arise |
No U.S./Puerto Rico/Canada suit requirement; designed to respond directly under foreign legal systems |
|
Defense / Reimbursement Mechanics |
Insurer defends and pays directly, but only within the policy’s coverage territory rules |
If foreign law blocks the insurer from providing defense or paying damages directly, you pay first, and the insurer reimburses you |
Insurer typically defends and pays directly in-country, often through local representatives and claims teams |
Understanding these differences upfront can help you choose the right coverage before an overseas claim puts it to the test.
Amendment of Coverage Territory – Worldwide Coverage (CG2422) for Product Liability
The Amendment of Coverage Territory is an endorsement that can be added to the ISO general liability policy. This policy amendment expands the coverage territory to “anywhere in the world,” with the exception of any country or jurisdiction subject to trade, economic sanctions, or embargo by the United States.
“Anywhere in the world” offers much broader coverage than the standard policy, but it comes with a catch: some countries’ laws restrict how a U.S. insurance company can operate there, which can complicate the way claims are paid or defended. The CG2422 endorsement addresses this with two key stipulations:
- If the laws of the foreign country where the claim occurred prevent the insurance company from providing you with a defense, then you will be required to pay the defense costs, and the insurance company can reimburse you.
- If the insurance company is prohibited from paying covered damages on your behalf, you would need to pay damages, and the insurance company would reimburse you.
If the Amendment of Coverage Territory endorsement is available, it may be a cost-effective solution for your business to provide coverage outside the United States.
“Worldwide” Coverage Territory for Product Liability
Some product liability policies do not use the standard ISO coverage territory definition and expand the coverage territory without adding any amendments to the policy. In these cases, the definition of the coverage territory would say something like: “This insurance applies to claims made and acts committed anywhere in the world.”
This type of coverage territory language is less common than the ISO version, but if it’s available, it’s worth considering.
Foreign Liability Coverage for Product Liability
Another option to consider is foreign liability insurance, a standalone policy built specifically for businesses operating outside the U.S. — not an add-on to your existing product liability policy, but its own coverage designed for the unique risks of doing business abroad.
Consider a foreign liability insurance policy if you:
- Import/export raw materials or finished products, or sell services to customers outside the U.S.
- Use the internet to advertise or sell products or services to customers in foreign countries
- Participate in multinational exhibitions, trade shows, trade fairs, or conferences
- Sponsor trips, tours, or study groups abroad
- Perform service or repair work abroad
A foreign liability policy may provide additional coverages beyond general and product liability insurance. A foreign liability policy could include:
- Workers compensation coverage
- Medical relocation and repatriation expenses
- Business travel accident coverage
- Kidnap, ransom, and extortion coverage
- Medical assistance services
- Security assistance services
- Personal assistance services
Many insurance companies offering foreign liability packages have representatives in hundreds of countries and territories, with 24/7 access to centers staffed with multilingual coordinators, case managers, and medical and security staff.
Controlled Master Programs for Product Liability
Companies with extensive operations in many countries may opt for a controlled master program (CMP) to help them navigate foreign regulation systems and provide more universal product liability protection and legal defense. Instead of buying a separate, disconnected insurance policy in every country where they operate, a company sets up one master policy in its home country that coordinates local policies in each country where it does business.
CMPs are especially useful for major multinational corporations because many countries require locally admitted (i.e., insurance carriers based in their own country) rather than foreign insurance providers. CMPs are built for companies with ongoing operations (offices, staff, manufacturing, or major sales volume) simultaneously in several countries.
Why Do Standard Product Liability Policies Sometimes Fail Overseas?
Standard product liability policies are built around a specific coverage territory, and that territory has borders. Here’s where common product liability coverage gaps may emerge when you sell overseas:
- Territorial limits: Most standard policies (built on the common ISO liability form) only cover the U.S., Puerto Rico, and Canada by default. To extend coverage overseas, you may need to add a “worldwide” endorsement to your policy, or consider a foreign liability policy (or CMP, if your international operations are extensive).
- Lawsuit location requirements: In a standard policy, even when a product injures someone overseas, the policy typically requires that the lawsuit be filed and decided in the U.S., Puerto Rico, or Canada. If a case is filed in a foreign court, a standard policy may not respond, regardless of where the product was made or sold.
- Foreign jurisdiction gaps: Some countries have laws that restrict how U.S.-based insurance companies can operate within their borders, including providing legal defense or paying out a claim directly. When that happens, a standard policy (even one with expanded territory) may not be able to respond without specific endorsements.
- Import/export liability blind spots: If you import finished goods or raw materials from overseas, a standard policy may not clearly cover liability tied to products made by a third party abroad, leaving a gap between what you assume is covered and what your policy actually addresses.
A standard policy can be a strong defense against lawsuits filed within the U.S., its territories, and Canada, but if your business operations or sales extend farther, you may need endorsements to strengthen your coverage abroad.
Pro Tip: Find more answers to frequently asked questions — including cost breakdowns and how to file a claim — in our product liability FAQs.
How to Get Product Liability Insurance to Protect You at Home and Abroad
It’s crucial to understand the limitations of your product liability policy as it relates to foreign risks — and what options you have, ranging from a simple endorsement to a full global program, depending on how much international exposure your business has.
- Add the CG2422 worldwide endorsement: An add-on to your existing policy that expands coverage to anywhere in the world, except sanctioned countries; best for businesses with occasional international sales.
- Look for “worldwide” coverage territory language: Though less common, some policies build broader territory language in from the start, no endorsement needed; best for businesses that want one simple policy to track.
- Get a standalone foreign liability policy: A separate policy built for international operations, often including coverage a standard policy skips — workers comp abroad, medical evacuation, business travel accident, and more — plus real in-country support; best for businesses with regular international operations, like importers/exporters or companies with staff abroad.
- Consider a controlled master program (CMP) for larger operations: A “master” policy in your home country works alongside local policies in each country where you operate, solving the compliance issue that many countries require locally-admitted coverage; best for larger multinational companies with real scale abroad.
Discussing these options with a professional insurance representative helps you make informed decisions on how to protect your business overseas.
Disclaimer: All insurance policies have limitations, conditions, and exclusions. Please refer to your policy for exact coverages and verbiage.
Chris Van Leeuwen, CIC | VP of Professional Development
Chris Van Leeuwen is the VP of Professional Development for Insurance Canopy. He has held the prestigious Certified Insurance Counselor (CIC) designation since 1996.
Because he strongly believes in the importance of helping business owners understand their insurance coverage, Chris uses his wealth of experience to offer insights to small business owners across the country who are looking to navigate business liability insurance.
Chris Van Leeuwen is the VP of Professional Development for Insurance Canopy. He has held the prestigious Certified Insurance Counselor (CIC) designation since 1996.
Because he strongly believes in the importance of helping business owners understand their insurance coverage, Chris uses his wealth of experience to offer insights to small business owners across the country who are looking to navigate business liability insurance.
