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Coverage territory

Coverage territory refers to the geographic area where an insurance policy is valid.

What is coverage territory?

An insurance policy’s coverage territory is the geographic location where its benefits apply. For example, the coverage territory for a health insurance plan may be limited to your state, region, or the nation itself.

That’s why the health insurance and auto insurance you have in the United States might not cover you when traveling outside the country.

This is because insurance companies are regulated at the state level, and your location is an important factor that underwriters use in evaluating their risk management plans and pricing their policies.

How does coverage territory work?

The coverage territory of an insurance policy often depends on the type of business insurance you have. Let’s look at the different types of policies and how their coverage territory affects you.

What's the coverage territory of a comprehensive general liability policy (CGL)?

The Insurance Services Office (ISO), an insurance rating and data organization, defines the coverage territory for commercial general liability policies as:

  • The United States, its territories, possessions, Puerto Rico, and Canada (Mexico is excluded)
  • International waters and airspace (for claim events that happen while traveling between places)
  • The entire world, if an injury or physical damage arises from products made or sold within the coverage territory
  • Business travel, for those who reside in the coverage territory
  • Personal and advertising injuries that take place online

Any lawsuit involving general liability insurance must be filed in the United States, its territories and possessions, or Canada. A lawsuit filed in a foreign country would not be covered.

You might be able to expand your general liability coverage, through a policy endorsement, to include other parts of the world.

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What is the coverage territory for a business auto policy?

For commercial auto insurance, your insurance policy is written based on laws in your state. You would typically buy this coverage in the state where your vehicles are registered.

The commercial vehicle insurance you buy in one state will cover you in any other state. Your coverage might also extend to Canada, though it’s unlikely to include any other country.

If your vehicle insurance includes rentals, your coverage territory for rented vehicles could be limited to the United States. You might not be covered when renting a vehicle in another part of the world.

What is the coverage area for property insurance?

The coverage area for commercial property insurance would be the state or U.S. territory where your business resides. The properties listed on your property insurance policy are the ones receiving this coverage. If your business owns properties in another state, you might need a separate policy to cover them.

What is the coverage territory of workers' compensation insurance?

The coverage territory for workers' compensation insurance is usually the state where the covered employees are working, because workers' comp laws and regulations are set by individual states.

If an employee travels to another state for a short time as part of their job, their workers' comp might cover them on a temporary basis, so a work-related bodily injury or illness would still be insured.

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Updated: July 13, 2023
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