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About Sam Leeder and Paul Taylor of Actus Insurance, Sheffield

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Exporting doesn't have to be scary!

Oct 16, 2018

As the date that we leave the EU gets ever closer we are constantly being encouraged to be more outward looking as a country, which as an island nation we have always been.

There is now more support than ever for companies who would like to start their export journey, whether that is with market research, finance, business planning or understanding how to get paid.

This support aims to break down the barriers to exporting and to make the whole process seem less scary.

If this is something you are considering you may also want to look into the impact on your insurance arrangements, which may seem complicated, but it doesn’t need to be.

The type of insurance you will need will vary slightly depending on whether you are simply sending products abroad, either directly to customers or through local distributors, or whether you are planning to open a local office or employ local people.

Exporting directly to local customers/distributors

This is really quite straight forward from an insurance perspective and your insurances should focus on three main areas:

Goods

Insurance for goods being sent around the world is catered for by the marine cargo insurance market and is based upon the total value of goods being sent during a 12 month period and the maximum value of all goods on any one vessel.

The way the insurance is arranged will depend on the selling terms you negotiate, however the cover can be included from the moment it leaves your factory right up until it hits your customer's premises.  This would include transport by rail, road, air or sea and will include temporary storage throughout the journey. It would also provide cover for packing and unpacking at various premises along the way if appropriate.

You will no doubt need to use a freight forwarder to send your goods abroad and they will be able to sell you some insurance cover for the cargo.  Generally we would recommend that you purchase your own insurance in these circumstances as you will remain in control of any claims and you will pay lower premiums on the whole.

Liabilities

As in the UK you have a liability for any injury or damage caused by your products or services and to your employees.

You will therefore need to ensure that your liability insurances you buy in the UK are with insurers who are comfortable with those same risks in other countries.  This will vary greatly depending on where you are planning to export to.

Some countries, such as the USA and Canada are deemed to be a much higher risk than most others due to the likelihood of claims occurring and also the size of the damages awarded by the courts in those countries.

For this reason you will pay a much higher premium to export to the USA and Canada than you would for sending products to any other country.  This also restricts the number of insurers who will be able to provide the cover.

People

Travelling overseas on business can pose much greater risks to you and your people than doing so in the UK.

Once again the risks posed vary greatly depending on the countries you are considering for export and these risks include:

  • Theft or robbery
  • Accidental damage or loss of business property
  • Personal injury
  • Kidnap and ransom

Thankfully all of these risks can be insured against with the appropriate insurers, however the cover can be difficult to obtain if you are travelling to high risk countries.  In addition to this most insurers will not provide cover if you are travelling against foreign office advice.

Opening a local office or employing local people

In certain countries and industries it can be more difficult to get access to the local market without opening at least a sales office in that country.  Alternatively you may not want to use local distributors and prefer to tackle the sales side of things yourselves.

From an insurance perspective this is absolutely achievable, however it is certainly worth talking to a broker who has expertise in this area.

Every country has their own laws around insurance, particularly in respect of employers liability and this can make arranging cover a bit tricky.

In the USA this can be even more complicated as employers liability legislation varies from state to state.

If you are thinking of exporting and would like to have a chat about the potential costs from an insurance perspective please get in touch and we would be happy to have a chat.

To access further advice about exporting in general why not get in touch with the Department of International Trade www.great.gov.uk, who can provide loads of support.

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