Short answer
Professional liability coverage territory tells you where work and claims can happen, but it doesn’t settle whether overseas design work is covered. Who counts as an insured and what you disclosed on the application often decide that. Ask your agent to get the insurer’s answer in writing, since coverage depends on your policy terms, exclusions and underwriting.
How does professional liability coverage territory treat work done abroad?
Territory wording answers three separate questions:
- Where is the project?
- Where is the work produced?
- Where would a claim be brought?
Many A&E policies cover services performed anywhere, as long as the claim is brought in the US or Canada. Some go further. Check your declarations and the policy’s definition of coverage territory. The IRMI glossary entry for coverage territory gives general background on the term.
Who is an insured when the design team is overseas?
Policies usually cover the named firm, its owners and its employees for work done on the firm’s behalf. People employed by a separate foreign company are often not insureds just because they work on your projects.
A foreign sister company or affiliate is usually a separate entity and may need its own policy in its own country. One insurer told a client in writing that claims against a separate foreign entity the policy doesn’t cover would not affect the US policy, because the policy covers the US entity. Wording differs by policy, so confirm yours.
Offshore drafting vendors and freelancers often look like subconsultants to an insurer. Your policy may defend your firm over their mistakes, depending on its terms, but it doesn’t insure them. Our articles on bringing a 1099 architect into your firm and your own subconsultant terms are worth reviewing here.
Example: a hypothetical dual-licensed principal
A principal licensed in the US and abroad runs a US corporation that holds the client contracts and the license. Much of the design is produced at a sister office overseas. Before paying the first installment, the principal asks the insurer for its position in writing on three points: claims against the separate firm, risk management requirements for overseas staff, and work produced abroad by non-employees.
In this hypothetical, the written answers sit on file with the policy. Whether the policy responds to a later claim depends on its terms, exclusions and underwriting. Getting answers before you need them is a sound habit either way.
What should you tell the insurer on the application?
Applications often ask about affiliated firms, prior claims and work performed outside the US. Answer fully, because a “yes” with no details may leave a gap that causes trouble later.
- Disclose claims against related firms even if you believe they don’t apply. Let the underwriter decide and ask for the answer in writing.
- If your policy requires all professionals to complete a risk management course, ask whether that includes staff abroad.
- Ask whether working with an offshore drafting team changes your application.
Many policies are written on a claims-made basis, timing and disclosure matter.
Which contract terms keep this simpler?
Contract structure may help clarify who does what:
- Have the US firm hold the client contract and the license, and state in the overseas agreement that the US firm reviews and stamps the work.
- Choose US law and a US venue where you can, and ask your attorney about the wording.
- Put subconsultant terms in writing and collect certificates where the overseas team can get coverage.
Licensure rules differ by jurisdiction, and NCARB’s licensure information is a starting point for architects.
Which other policies should you check?
- Cyber liability. Project files moving across borders may bring different privacy rules.
- Workers’ compensation. Staff traveling for the firm may need foreign voluntary coverage. See our article on Workers Comp With No Employees.
Our professional liability page explains how coverage for design firms is structured. If you operate through more than one company, see Two LLCs, One Practice: Does Your Professional Liability Policy Cover Both Entities?.
How does Hardcover help with work produced abroad?
Before you rely on an answer about overseas work, we put the specific question to the insurer in writing. The insurer’s written response then stays on file with your policy, so you can find it when you need it. Coverage still depends on your policy terms, exclusions and underwriting, and the insurer makes the final call.
What to check
- What does your coverage territory say about where work is performed and where claims are brought?
- Does the “who is an insured” section include everyone producing your drawings?
- Is any affiliate or sister company a separate entity that needs its own policy?
- Did your application fully describe affiliated firms, prior claims and overseas work?
- Does the risk management course requirement cover staff abroad?
- Do you have the insurer’s answers in writing?
Related questions
Does my professional liability cover drawings produced overseas?
It can. It depends on your coverage territory, who counts as an insured and what you disclosed. Ask your agent to get the insurer’s answer in writing.
Are employees of my foreign affiliate covered under my US policy?
Often not automatically. A separate foreign company is usually a separate insured or needs its own policy. Check the “who is an insured” section.
Do claims against my foreign sister company affect my US policy?
If the foreign entity is separate and not covered by your policy, an insurer may treat those claims as outside the policy. Disclose them anyway and let the underwriter confirm.
What does worldwide coverage territory mean on an A&E policy?
Usually that covered services can be performed anywhere. Many policies still require the claim to be brought in the US or Canada. Read the exact wording.