Mark Lawrence, underwriting development manager for technology at Travelers, considers the importance of worldwide liability cover for technology firms

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Mark Lawrence, Travelers

At a time when technology can make it feel like a customer in a different part of the world is in the next room, it can be easy to forget about the challenges that remain when contracting with a business overseas.

European technology and medical technology companies that contract with US entities or sell their products and services in North America, for example, must consider a range of risks that may not come into play when transacting business closer to home.

Differences in regulatory structures – or simply differences in how conflicts are settled in the US – can expose a European company to significant expense when problems occur. When trading - either purposefully or inadvertently - in the US, it is important to be familiar with potential exposures based on local laws and jurisdictions.

An insurer that appreciates these differences and can provide expertise to help navigate nuances can be useful.

Here are some factors to consider when contracting with US businesses.

Legal/damages landscape

UK and Irish businesses may be vulnerable to risks when trading in the US.

There are US laws that may overrule a choice of law clause, including laws relating to competition, intellectual property and data protection, as well as federal and state laws on warranties, guarantees and product-related consumer protection.

Furthermore, several features of the US legal system increase the potential exposure of defendants that come before it. Damages may be assessed by a jury, rather than a judge. A jury assessing damages may sympathise with a US claimant – or many US claimants in the case of a mass tort.

Public, products, professional indemnity and cyber liability covers should provide worldwide jurisdiction, including in North America. An undefended claim could result in a company losing the ability to trade in that market.

Contractual requirements

Contracts are the foundation of the relationship between the technology company and their customer. Contract terms can help regulate the relationship and manage risks. Clauses such as a waiver of subrogation, hold harmless agreement, or an additional insured clause, for example, should be agreed to only after legal consultation since they can limit the rights of the insured and increase their liability.

Public, products and professional indemnity insurance that automatically includes additional insureds will enable the technology company to meet their contractual obligations.

Vendor’s liability

When selling a product via a US distributor, cover may be required under the public and products liability section of a vendor’s liability policy, to indemnify the distributor for distribution or sales of that product.

US subsidiaries

If a business is working with an insurer that provides a global and compliant solution, then it can connect with experts that are aware of the risks of conducting business in a specific region.

UK or Ireland companies with US subsidiaries may need this level of support to understand what legal differences exist across states and jurisdictions.

Local claims handling

When something goes wrong, it can be a relief to speak with someone local who can provide prompt claims support to settle a problem. Again, the support of a global insurer ensures local support is available to insureds.

When a European technology company has exposures in North America, it’s important that their insurance solution provides the appropriate coverage and expertise to handle possible exposures, including contractual, regulatory and business risks.

Click here to see Travelers’ liability products.