UK professional indemnity wordings contain two geographic controls and firms regularly confuse them.
The territorial limit describes where the work may be performed or where the loss may occur. Worldwide territorial cover means the insured can advise a client based anywhere.
The jurisdictional limit describes which courts may determine the claim. A common formulation is worldwide excluding the United States of America and Canada, which means the policy responds to work done anywhere but not to proceedings brought in, or judgments enforced from, those two jurisdictions.
A firm can therefore have worldwide territorial cover and still be uninsured for the claim that actually arrives, because the claim was filed in a US federal court.
The exclusion is about the cost of the legal system rather than the quality of the work. US litigation carries features that UK underwriters price separately: jury trials, punitive and exemplary damages, contingency fee funding, extensive pre-trial discovery, class actions and the absence of a general costs-shifting rule. A defence that would cost a modest sum in the High Court can cost a multiple of that in a US state court before liability is even reached.
Canada is usually bracketed with the United States because of similar procedural exposure and the practical difficulty of separating cross-border claims.
The distinction between the presence-based and the proceedings-based version is the practical one. A UK consultancy with no US office but a US client can be comfortable under the first and exposed under the second.
Technology and software work carries the highest incidental exposure, because a product or platform delivered from the UK can be used by US end users without any deliberate decision to enter that market. Contract terms compound the problem where the client's standard agreement specifies New York or Delaware law and a US forum. Firms in this position should read the jurisdiction exclusion against every client contract they sign, and the general framework for IT consultants assumes UK-facing exposure unless the wording is extended.
Advisory practices meet it through international engagements, expert appointments in cross-border disputes and work for UK subsidiaries of US groups where the parent is the real decision-maker. Management consultants should check whether the engaging entity is the UK subsidiary or the US parent, because the answer often determines the forum.
Engineering and technical consultancies encounter it on international projects, particularly where a US-domiciled developer or funder takes an assignment of the appointment. The position for engineers should be reviewed project by project rather than annually.
US and Canada jurisdiction cover can be bought, usually at a materially higher rate and often with a separate, higher excess and a defence costs structure that differs from the main policy. Insurers will want to see the volume of US-facing revenue, the contract terms in use, whether there is any US establishment, and the firm's approach to jurisdiction clauses in engagement letters.
The cheaper control is contractual. Where the work does not require a US forum, negotiate English law and the courts of England and Wales into the engagement. Where the client will not move, price the risk and take the decision consciously. Apex asks about US-facing work at every renewal, because it is the single most common source of an unexpected uninsured claim in an otherwise well-arranged programme.
Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Firm reference number 724952. This entry is general information, not advice on any particular policy.