1. Forms
2. EP
3. EP-01-35

What the form is

The EP 01 35, titled "Amendment of Coverage Territory - Worldwide Coverage Except For Specified Countries," is an endorsement used with an Employment-Related Practices Liability (ERPL) insurance policy. Its primary function is to modify the standard coverage territory defined in the main policy. This endorsement extends the geographical scope of the coverage to apply to wrongful acts occurring anywhere in the world. However, it includes a schedule where specific countries can be listed, and coverage will not apply to claims arising from those scheduled countries. If the insurance company cannot participate in the defense in a covered country (i.e., worldwide and not listed in the excluded countries schedule), the insured will typically be reimbursed for defense costs, subject to the policy limit.

Classes of business it applies to

This endorsement is suitable for businesses that have international exposures but wish to exclude certain countries from their ERPL coverage. This could include:

• Multinational corporations: Companies with offices, employees, or significant business activities in multiple countries. They might use this endorsement to exclude coverage in countries with exceptionally complex or unfavorable legal environments for employment practices claims, or where the insurer has limited capabilities.
• Companies with employees who travel internationally: Businesses whose employees frequently travel abroad for work, potentially exposing the company to employment-related claims in various jurisdictions.
• Exporters or companies with international clients/contractors: If their employment practices could lead to claims in foreign territories, but they want to specifically carve out problematic countries.

Real-world example: A U.S.-based technology company has a sales team that travels globally. They also have small satellite offices in several European and Asian countries. However, due to extreme political instability or a legal system where the insurer cannot effectively operate, they might choose to use EP 01 35 to exclude coverage for claims arising in one or two specific, high-risk nations, while maintaining coverage for the rest of the world.

Special considerations

• Accurate Scheduling of Excluded Countries: It is crucial that the countries intended to be excluded are accurately and clearly listed in the endorsement's schedule. Any country not listed will fall under the "worldwide" coverage provision (unless otherwise excluded by general policy terms, such as U.S. trade sanctions).
• Understanding Defense Provisions: While coverage is worldwide (outside scheduled exclusions), the insurer's ability to directly manage defense in every foreign jurisdiction may vary. The policy, as amended by this endorsement, often provides for reimbursement of defense costs if the insurer cannot directly defend.
• Conflict with Sanctioned Countries: This endorsement typically works in conjunction with general policy provisions that might already exclude coverage in countries subject to U.S. trade or economic sanctions. The EP 01 34 (Worldwide Coverage) explicitly mentions this, and similar principles would apply.
• Alternative to Broader Coverage: This endorsement is an alternative to EP 01 34 (Amendment of Coverage Territory - Worldwide Coverage). It is used when the insurer or insured is not comfortable with blanket worldwide coverage and prefers to specifically identify and exclude certain territories.

Key information for agents and underwriters

• For Agents:
  • Thoroughly discuss the client's international operations and employee locations/travel to identify all potential foreign exposures.
  • Clearly explain the implication of listing (or not listing) a country in the schedule.
  • Advise on the importance of keeping the list of excluded countries current if the client's international risk profile changes.
  • Explain how defense of claims in foreign jurisdictions will be handled, including potential reimbursement scenarios.
• For Underwriters:
  • Carefully assess the risk associated with the countries that will remain covered under the worldwide provision. This includes evaluating the legal and regulatory environment concerning employment practices in those countries.
  • The list of excluded countries provides insight into the insured's (or insurer's) risk appetite or specific concerns.
  • Pricing should reflect the broadened territory, even with exclusions, considering the potential for claims in diverse legal systems.
  • Evaluate the insurer's own capabilities (or those of its partners) to manage or support claims in the various non-excluded foreign jurisdictions.
  • Consider the interaction of this endorsement with other policy terms, such as choice of law or venue for disputes.