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Foreign Liability

Coverage details

A Foreign Liability policy (sometimes also referred to as a Foreign Package policy) is designed for U.S.-based hedge funds that have partners or employees that travel overseas, or that have locations outside the U.S. This additional policy is needed because your basic Office Package policy only covers loss to property or accidents that occur in the U.S. or Canada. The policy combines several foreign commercial insurance products into one comprehensive program. You can select the coverages you need for your hedge fund from the list of available products shown below.

The policy limits and premiums are in U.S. dollars. The carriers that write this type of policy have worldwide networks of local offices to provide claims and underwriting services anywhere you do business.

Assurex Global

For our U.S.-based hedge fund clients that have offices overseas, Hedge Fund Insurance can arrange locally admitted policies where required in any foreign country through one of our Assurex Global partners. The Foreign Liability policy can be designed to wrap around your locally admitted policies to provide uniform coverage and consistent, high limits for all your foreign offices.

Coverage Description
Foreign General Liability Covers claims for third party bodily injury and property damage liability for accidents that occur outside the U.S. and Canada. Primary limits of $1,000,000 per occurrence.
Foreign Commercial Auto Liability Covers claims arising out of auto accidents that occur outside the U.S. and Canada. Coverage for hired and non-owned vehicles is excess of local compulsory limits. Auto physical damage (comprehensive and collision) coverage can also be included.
Foreign Voluntary Workers' Compensation / Employers Liability Provides primary Workers' Compensation coverage (medical and lost wages) for employees injured while working or on a business trip outside the U.S. or Canada. Also covers defense costs and any judgment or settlement for claims for bodily injury to employees for accidents or endemic illness that occurs outside the U.S. or Canada. The standard limit for Employers Liability is $1,000,000 per occurrence / disease. The policy will also cover the cost of medical evacuation / repatriation. Coverage is available for U.S. nationals, third country nationals, and local nationals.
Foreign Property Covers loss or damage to real and personal property outside the U.S. and Canada. Business income and extra expense for foreign offices can also be insured.
Kidnap & Ransom / Extortion Policy covers loss due to kidnap and extortion events anywhere in the world. Carriers generally provide expert response teams to negotiate for release of victims.
Foreign Travel Accident and Emergency Medical Expense Covers accidental death and dismemberment and qualified medical expenses. Can include coverage for the cost of emergency medical evacuation and repatriation expense. Most carriers also provide toll-free assistance services.
Executive Assistance Services Suite of live emergency and travel assistance services including emergency medical, personal, legal and travel services, emergency medical and political evacuation or repatriation and concierge services. Includes 24/7 access via toll-free number.
Political Risk Coverage can be provided for confiscation, expropriation and nationalization of property owned by the hedge fund.

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Information needed to quote

We need the following information to quote a Foreign Liability policy for your hedge fund:

  • List of foreign offices, including addresses and property values to be insured
  • Number of fund employees that travel outside the U.S.; estimated number and duration of foreign trips in the coming year
  • Completed and signed Foreign Liability application

Hedge Fund Insurance, a division of Frenkel & Co., Inc., has access to every major market in the U.S., London, and Bermuda. As brokers, we represent the policyholder and not the insurance company. Among the largest brokers in the country as ranked by Business Insurance magazine, we have the market clout necessary to get you the best possible price. Some of the markets we place Foreign Liability policies with include:

  • Chartis (the new name for the carriers owned by AIG)
  • Chubb
  • CNA
  • Fireman's Fund
  • Hartford
  • Travelers
  • Zurich

Foreign Liability policies for U.S. hedge funds with no overseas offices are rated based on the estimated amount of foreign travel. These policies cost roughly $2,500 to $3,000. For hedge funds with locations outside the U.S., premiums will depend upon the number of offices, property values, and the number of employees working outside the U.S. Of course, Hedge Fund Insurance will provide you with a complete proposal, including the exact annual premium, once we better understand your risk and have had a chance to present your account to underwriters.

Claim Examples
Hedge Funds typically have a very low frequency of Foreign Liability claims. Some possible claim scenarios that could be covered under a Foreign Liability package policy include:
  • An American hedge fund employee travels to London to open a new branch office. She loans her car to another American employee, who is not covered by the rental car policy and strikes a pedestrian while driving. The pedestrian sues the investment manager entity for medical costs, continuing nursing care, emotional suffering and lost wages, with potential liabilities exceeding US$200,000.
  • An analyst with a U.S.-based hedge fund loses his briefcase, money, credit cards and identification to a mugger while attending a conference in Russia. He does not speak Russian and requires assistance to report the theft and quickly replace his ID, credit cards and money.
  • After a 12-hour flight to Hong Kong, a partner with a U.S. based hedge fund draws a bath at a rented corporate apartment and lies down to rest while the tub fills. He falls asleep and the tub overflows, causing major damage to the apartment and floors below. The apartment owner sues the investment manager for more than $100,000 in damages.
  • An employee of a U.S.-based emerging markets fund suffers a life-threatening injury while conducting business in China. To receive appropriate treatment, she is medically evacuated to Hong Kong. Total repatriation costs exceed $80,000.

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Copyright © 2009 Frenkel & Co., Inc.

Hedge Fund Insurance
a division of Frenkel & Co., Inc.
350 Hudson Street, 4th Floor, New York, NY 10014
Phone: 212-488-0270  Fax: 212-488-0432