Check these insurances when doing international business
- Sandra Visser-Meijer
- The basis
- Edited 3 July 2024
- 6 min
- Managing and growing
- International
Risks are part of doing business, but of course you prefer to keep risks as small as possible. For yourself, your business and your employees. Doing business internationally involves extra risks. For instance for transport, product liability, or when working abroad. You cover risks with insurance.
Most insurances are not compulsory, but they are sensible. Find out which risks you run and whether you already have insurance for these. Preferably with foreign cover. These 9 insurances cover your risks when doing international business.
- Cargo insurance
- Business liability insurance
- Hedging currency risks
- Credit insurance
- Social security
- Professional indemnity insurance
- Business legal expenses insurance
- Healthcare insurance
- Car insurance
1. Cargo insurance
International transport comes with extra costs and risks. During transport to and from abroad, your goods may be damaged. Or they get lost. Transporters are not routinely responsible for these damages. Therefore, consider cargo insurance. Whether you take it out yourself or your customer depends on the Incoterms® rule you agree on together.
Incoterms®
Do you use the Incoterms® CIF (Cost insurance and freight) or CIP (Carriage and Insurance Paid To)? If so, as a seller you are obliged to take out transport insurance. For other Incoterms®, buyer and seller are not obliged to take out insurance. Check which part of the transport is at risk. And whether you insure this risk.
2. Business liability insurance
Business liability insurance covers the risk of liability for causing damage to others. This is insurance for yourself, your employees and your products. Suppose you knock over an expensive vase at a customer's house. Or there is glass in the jam you delivered. This damage is covered by your business liability insurance. Check whether the insurance you have now provides cover abroad. When doing business internationally, you get more customers or suppliers. You buy or sell more products. This increases the risk of product liability. With more products, the likelihood of potential problems increases.
Product liability
Product liability is often part of your corporate liability. When buying and selling within the EU, products must meet product requirements. You are only allowed to sell safe products. Perhaps your customer suffers damage while using your product. You can claim this damage back via your AVB. The rules for product liability for imports within the EU are different from those for imports from outside the EU.
Liability for imports within the EU
If you import products from an EU country, the product liability lies with the producer. You reverse charge VAT on purchased products to the EU producer or supplier. If you bought the jam with glass in it in Italy, you reverse charge VAT to your Italian supplier. Conversely, a European buyer falls back on your business in case of damage claims due to your products.
Andere regels voor import van buiten de EU
If you import products from outside the EEA, you are the producer from the point of view of the law. You and your business bring the product onto the EU market for the first time. This makes you liable as the producer for damage caused by a fault on your product. This liability is only for importers, not for commercial agents.
Example: day creams from Thailand
You import day creams from Thailand. After using it, customers get skin rashes from your cream. Under the law, you are fully liable as a manufacturer. Reversing the claim VAT is not possible in this case. Without product liability insurance, you reimburse the damage amount yourself.
Export product liability
Insurance companies are cautious about taking out product liability insurance when exporting to certain countries. For countries like Canada or the United States, for example. Do you want to cover this risk? Then check your policy conditions to see if your insurance provides cover abroad.
3. Hedging currency risks
Customers sometimes want to pay in a currency other than euros. Or suppliers ask for it. This happens especially when doing business with countries outside the EU. The exchange rate of that foreign currency sometimes changes. For example, between the time you make the price quotation and the time you send and pay the invoice. This currency fluctuation affects your business.
Are you not allowed to pay in euros? And you do not want to run a risk? Then hedge the currency risk. With a currency option, for example. With this right, you buy foreign currency at a predetermined rate. You pay a premium for this right. Discuss the best solution for your situation with your bank.
4. Credit insurance
Do you deliver products on invoice? Then your customer will only pay after receiving the goods and invoice. If your customer does not pay invoices, credit will help. You take out this insurance with a bank or insurance company. You will then receive the money from your insurer if your customer cannot pay.
Sometimes credit insurance is only for customers in the Netherlands. If you do a lot of business with customers from one or several countries, you can take out credit insurance per country. Dutch insurers or independent advisers will tell you more about this.
Export credit insurance
Banks and insurers sometimes do not offer insurance against customers who do not pay. For instance, if large amounts are involved. Or for projects with a long lead time. Then check out the Dutch government's export credit . If you do international business, the government will compensate your losses. There are conditions attached to this insurance. For example, you must have a business in the Netherlands.
5. Social security
Are you working outside the Netherlands temporarily? And do you want to stay covered under social insurance in the Netherlands? In that case, you should apply for an A1 certificate. You will only get such a certificate if you are going to work in another EU, EEA, or treaty country. You can apply for the certificate from the Social Insurance Bank (SVB).
For some countries, you will always need an A1 certificate. For example, if you normally work in the Netherlands and are temporarily doing construction work in Germany. If the construction site is inspected, without an A1 certificate you risk a fine from the German labour inspectorate.
6. Professional indemnity insurance
Maybe you make a mistake during your work. Or one of your employees does. If so, your business will be responsible for any resulting damage. Think of giving the wrong advice. Or making a wrong design for a foreign client. Your customer or client suffered financial damage as a result. You cover it with professional indemnity insurance (BAV). This damage is not covered by your business liability insurance (AVB).
For some professional groups, public liability insurance is compulsory. For example, for financial advisers, architects and accountants. If you advise other businesses or deliver parts in large projects, a BAV is useful.
7. Business legal expenses insurance
Sometimes you may have problems with foreign customers or suppliers. For example, because you are not satisfied with the quality of the products. Your supplier does demand payment. Business legal expenses insurance insures you against the costs of legal assistance. Think of costs for legal advice. And litigation, court or lawyer's fees. This insurance only covers social assistance and not the amount of damages. You can claim damages through your business liability insurance.
Note: Most insurance companies do not insure disputes with foreign parties as standard.
8. Healthcare insurance
Basic healthcare insurance is compulsory in the Netherlands. Also for entrepreneurs. Suppose you break a leg while working abroad and end up in hospital. Your Dutch healthcare insurance will not automatically cover the costs.
Apply for a free European Health Insurance Card (EHIC) from your health insurer. With this card, you will receive essential medical care in many countries. This is the case in countries of the EU, Iceland, Liechtenstein, Norway and Switzerland. Do you want more information about the EHIC card? Then check out the information in English on the VisaGuide website.
Does your Dutch health insurance offer insufficient cover abroad? Then take out international health insurance for your temporary stay abroad.
Business travel insurance
The conditions of travel insurance usually state that you are not allowed to do any paid work during your trip. Are your staff travelling on business for your company? Then your business is responsible for accidents and problems while travelling. Take out business travel insurance for this.
9. Car insurance
Car insurance is compulsory when using a motor vehicle in your company's name. For example, a car or van. The Third Party Motor Liability Insurance (WAM or WA-verzekering) insures your traffic liability. You take out third-party insurance for your company car in the name of your company. Apart from this compulsory insurance, you can take out additional insurance. Think about passenger insurance or WA+. With WA+, you also insure damage to your own car.
Most third-party insurance policies also cover damage abroad. When taking out car insurance, you will receive a green card from your insurance company. With this you can prove internationally that your car is insured. This card shows in which countries you have third-party cover.
Do you take tools abroad in your company car? Or products? These usually fall outside your car insurance. You can recover damage to these items through your business liability insurance. Another country sometimes has requirements for your car insurance. In the United Kingdom, for instance, you need at least third-party insurance. This insurance is similar to the Dutch WA insurance.
