First US client? Your Dutch insurance may stop at the border

Entering a new market mainly feels like a commercial opportunity. But doing business internationally does not just change your revenue potential. It also changes your liability risks. And when it comes to the United States, Dutch insurance policies do not always automatically provide the coverage you need.

The contract is signed. Your software company has secured its first major client in the United States. Commercially, that is an important milestone, but your risk profile changes immediately too.

US contract terms, high legal costs and broad liability clauses do not necessarily fit within the scope of a Dutch insurance policy. For the CEO or CFO of a growing tech company, this is therefore the right moment to reassess the insurance coverage. Not after a claim arises, but before services to the US client begin.

A Dutch policy does not automatically provide worldwide coverage
Many Dutch liability policies offer broad geographical coverage, but make an exception for the United States and Canada. Your company may be allowed to conduct business there, while claims governed by US or Canadian law may not be insured at all, or only to a limited extent. The exact coverage varies by policy. Simply seeing the words ‘worldwide coverage’ is therefore usually not enough. This applies not only to general liability insurance. Professional indemnity and cyber insurance policies may also include restrictions relating to:

• Clients based in the United States

• Proceedings before US courts

• Claims assessed under US law

• Fines, damages or so-called punitive damages: additional damages that a US court may award to punish serious or reckless conduct, on top of the actual loss suffered

• Legal costs that fall outside the insured limit

Costs can arise before liability has even been established
A US claim does not have to be justified to become expensive. Simply defending a claim can already result in significant legal, investigation and litigation costs. Any settlement or damages may come on top of that. Suppose your software causes an outage at a US client. The client claims that its operations were disrupted and demands compensation for loss of revenue, remediation costs and claims from its own customers. Even if your organisation disputes liability, it still has to respond legally. Without appropriate US coverage, these costs may fall directly on the company. A claim could then affect not only profit, but also cash flow, investment capacity and business continuity.

Want to know more about US coverage?
Would you like to know whether your current insurance policies are suitable for your activities in the United States? For more information, please contact Sandy Buurman-Drenth, Senior Account Manager Tech.