Territorial limitation clauses can be found universally in domestic and international insurance policies. Under this coverage restriction, the policy typically covers bodily injury if the bodily injury … is caused by an occurrence that takes place in the coverage territory.” In domestic insurance policies, the territorial limitation clause typically limits coverage to the United States, Puerto Rico and U.S. territories. By designating specific territorial locations that are covered, the policy’s territorial limitation clause attempts to set forth clear boundary lines for the geographical reach of the insurance policy coverage. Quite often, those boundary lines can become blurred, causing uncertainty and resulting problems.
In the majority of jurisdiction, case law holds that “it is the location of the injury – not some precipitating cause – that determines the location of the event for purposes of insurance coverage.” The blurry boundary line arises in cases involving injuries that are sustained outside of the United States because of some act or omission that occurred in the United States and the policy restricts coverage to the United States. In this situation, courts have generally held that “[t]he location of an ‘occurrence’ is determined by the place where the injury happened; it does not matter that a precipitating event took place elsewhere.”
Source: Claims Journal
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