When UK companies set their sights on US expansion, they often discover their existing business insurance provides far less protection than they initially assumed. The transition from the UK’s relatively straightforward insurance landscape to the complex US market can present significant challenges that require expert guidance.
In this short guide, we explore the key differences in approach and identify the areas of cover you may need to investigate further prior to US market entry.
Key Coverage Considerations:
- Territorial limitations and exclusions
- Jurisdiction-specific requirements
- Coverage limit adequacy
Most UK businesses start their US journey with standard domestic coverage including property damage, public liability, professional indemnity, and employers’ liability insurance. However, these policies often contain territorial limitations that exclude or severely restrict coverage for US operations. Even when coverage extends to the US, the limits are frequently inadequate for the more litigious American environment.
The US legal system presents perhaps the most significant insurance challenge. Where UK policies might provide liability coverage of £5-10 million, US operations often require upwards of $20 million due to higher lawsuit settlements and the prevalence of punitive damages.
Healthcare and workers’ compensation represent entirely new territory for UK businesses. Unlike the NHS-based system, US healthcare often falls to employers, with mandatory coverage requirements under the Affordable Care Act. Workers’ compensation insurance, required by each state, differs fundamentally from UK employers’ liability coverage.
Essential US Coverage Requirements:
- Workers’ compensation (state-specific)
- Healthcare benefits compliance
- Cyber liability protection
- Enhanced professional liability
Property insurance, while familiar in concept, also requires significant adaptation for the US market. Natural disaster coverage becomes crucial, with considerations for hurricanes, earthquakes, and other region-specific risks that might be foreign to UK risk managers. Construction standards and risk ratings differ, often necessitating higher coverage limits and specialised policies.
The digital realm too, presents its own challenges. US cyber insurance requirements are typically more stringent, reflecting stricter data protection regulations and state-specific breach notification laws. The potential damages from data breaches in the US market far exceed typical UK exposures.
To successfully bridge these insurance gaps, GTM Global’s go-to insurance partner, Superscript, helps UK companies take several critical steps:
- Risk Assessment and Planning
- Review of existing policy limitations
- Analysis of US market requirements
- Development of comprehensive coverage strategy
- Budget planning and cost control
The financial impact of proper US insurance coverage often surprises UK businesses. Premium costs typically run significantly higher than in the UK market, reflecting both the increased risk exposure and the broader coverage requirements. Companies need to budget accordingly and implement robust risk management programs to help control costs.
Success in the US market requires understanding that insurance isn’t just about meeting legal requirements – it’s about protecting the business in a fundamentally different risk environment. Working with an experienced broker like Superscript, which understands both markets, helps ensure UK companies can navigate these complexities successfully.
The key to success lies in early planning, professional guidance, and recognition that US operations require a fresh approach to risk management, not just an extension of existing UK coverage. Companies that invest time and resources in getting their insurance strategy right from the start avoid potentially costly gaps in coverage that could otherwise derail their US expansion plans.
If you are actively planning US market entry or already expanding stateside, it’s important to ensure your insurance strategy is fit for purpose. Contact GTM Global to arrange a complimentary consultation with our specialist insurance partner, Superscript, who can review your current coverage and outline the essential requirements for US market protection.
Disclaimer: The information provided in this article is for general informational purposes only and should not be construed as professional advice. Readers should not rely on any information contained herein as a substitute for professional guidance and should seek independent expert assistance when making decisions related to transfer pricing or US expansion.
