Blog Question: Territorial Limits under a Combined General Liability (CGL) policy
I received this question overnight.
I follow you on LinkedIn and find your articles very informative and whilst I’ve never had to ask you a specific question I’m hoping you may be able to shed some light on the following.
I have a client who imports Underground Conveyor Chain Equipment used in Underground Coal Mines from the USA and my concern is regarding the General Liability Insurance territorial limits which excludes the USA.
I’m currently remarketing this account and the new insurer has advised as the insured is Importing (not Exporting) there is no issue regarding the territorial limits although these would remain as “Worldwide Excluding USA and Canada”.
My concern was if the insured imports something from USA which causes injury or damage and the insurer tries to blame the manufacturer however I’ve been advised the claim by a third party would be against the insured not the manufacturer.
If you could please provide your thoughts on this issue it would be greatly appreciated.
Mark [surname and email provided]
My response was:
Thanks for your note.
As I see it, I agree with the underwriter. Under current Australian law, the Insured is deemed to be the manufacturer when they import the product. [Competition and Consumer Act 2010 (previously the Trade Practices Act 1974)]
If the product in turn is only being used on Australian mines (or anywhere that the territorial limits apply then the cover you have in place will, subject to the limits, terms, conditions, and exclusions of the policy, protect the Insured.
What I am saying is that the territorial limits apply to the location of the loss, damage or injury not the point where the product is manufactured.
After the Insured has been fully indemnified, the issue of the origin of the product then becomes an issue when there is a recovery to be made and I would have thought that it would be better and easier for the insurer using their right of subrogation to achieve a recovery from a US company over say a supplier from say China, India or Indonesia or other countries with significantly different laws and regulations than Australia.
I hope this helps and puts your mind at rest.