Insurance for Australian companies with US customers may not respond to every claim arising from a US contract. Much depends on the territorial limits, jurisdictional restrictions and other terms in the policy wording. For software as a service (SaaS) and artificial intelligence (AI) businesses, two covers to assess are technology professional indemnity (Tech PI) insurance and cyber insurance.
Tech PI insurance is designed to cover claims that your advice, service or work caused a client financial loss. It may include legal defence costs, compensation and any settlement you are legally liable to pay, subject to the policy terms.
Cyber insurance is designed to cover costs after a data breach or cyber attack. First-party costs may include incident response, forensics, notifying affected people and data recovery. Third party cover may respond to claims from customers or regulators.
Cover depends on the policy and insurer you choose. Check the policy wording and its terms, conditions and exclusions for what is and isn't included.
Where does insurance for Australian companies with US customers apply?
Policy wordings may set two geographic limits: where your business performs its work and where a customer is based or brings a claim. These are generally described as territorial limits and jurisdictional limits. Their definitions and restrictions depend on the policy wording.
For businesses taking on overseas customers, it is important to check both service delivery and client location. The startup professional indemnity guide explains when a policy review may be relevant.
What is a territorial limit?
A territorial limit, or territory, may relate to where your business performs its services or where its customers are located. For example, a SaaS company based in Australia may provide software to customers in the United States. Whether those services fall within the policy's territorial scope depends on the wording.
Work performed outside the disclosed services or territory is commonly excluded under Tech PI insurance.
What is a jurisdictional limit?
A jurisdictional limit concerns where legal claims may be brought or which courts and laws fall within the policy's cover. If a customer brings a claim in a jurisdiction excluded by the policy, that claim may fall outside cover.
This can matter when an Australian business signs a contract with a US customer. The software startup insurance guide explains other considerations when taking on overseas clients.
| Policy term |
What it may relate to |
What to check for US customers |
| Territorial limit |
Where your business performs services or where customers are located |
Whether the policy covers services supplied from Australia to customers in the USA |
| Jurisdictional limit |
Where legal claims may be brought or which courts and laws the policy covers |
Whether claims brought in US courts fall within the policy wording |
Swipe left or right to see the full table.
Are claims brought in the USA and Canada treated differently?
Some insurance policies apply separate restrictions to claims brought in the United States or Canada. Check both your policy schedule and the full wording before agreeing to a contract. A policy may provide worldwide territorial cover while excluding claims brought in US or Canadian jurisdictions.
Worldwide cover therefore does not automatically mean your business is insured against every claim involving an overseas customer. Whether Tech PI or cyber insurance responds to claims brought in the USA or Canada varies between insurers and policy wordings. Review these restrictions before signing a contract that requires US exposure.
What may a US contract ask for, such as additional insured status?
A US customer's master services agreement (MSA) may include requirements for:
- US governing law and venue
- Higher insurance limits
- Additional insured status
- Contractual indemnities
- Evidence of insurance
These requirements may affect the insurance cover and contractual liability your business needs to consider.
Governing law and venue
Governing law determines which country's or state's law applies to the contract. Venue concerns where disputes may be heard. How these provisions operate depends on the contract and applicable law. Legal advice may be appropriate before agreeing to them.
Higher insurance limits and indemnities
A US customer may require higher Tech PI limits than your current policy provides. A broad indemnity may also extend your liability beyond what you would otherwise owe at law. Some contractual liabilities may fall outside Tech PI cover, as explained in the guide to professional indemnity and breach of contract.
Additional insured status
A certificate of currency confirms that an insurance policy is active and may name an interested party where the insurer accepts this. However, being noted as an interested party does not necessarily give that party the same rights as an additional insured.
If a US contract requires additional insured status, check whether your insurer can provide it under the relevant policy and whether the documentation meets the customer's requirements. The guide to SaaS enterprise insurance requirements explains other insurance conditions customers may include in procurement contracts.
What do tech professional indemnity and cyber policies commonly exclude?
Holding Tech PI and cyber insurance does not mean every loss or contractual liability is covered.
Tech professional indemnity
Exclusions commonly include, but are not limited to:
- Service credits, liquidated damages and other liability you accept under a contract that would not otherwise exist under the law (contractual liability exclusion)
- Claims and circumstances you knew about before the policy started
- Physical injury or property damage
Cyber insurance
Exclusions commonly include, but are not limited to:
- Intellectual property claims, such as patent or trade secret disputes, although an exception may apply to some software copyright claims
- Incidents a senior executive knew about, or could reasonably foresee, before cover started
Important: These lists are not exhaustive. Exclusions vary between insurers. Always refer to the policy wording and its terms and conditions for the exclusions that apply. If you have questions, speak to your insurance broker or the upcover team.
What may an insurer ask about US customers or revenue?
An insurer may ask about overseas revenue and the countries where your business sells its products or services.
For technology businesses, information requested during underwriting may include:
- The countries where customers are located
- Revenue generated from overseas customers
- Whether your business serves US or Canadian customers
- The services provided to overseas customers
- Countries where your business stores or processes customer data
Overseas revenue is among the factors insurers may ask about when assessing Tech PI insurance.
For AI businesses, the countries where products are sold or data is held may also be relevant. The AI startup insurance guide explains these considerations. Information about overseas customers may be relevant to your duty of disclosure.
If your business starts serving US customers, consider reviewing whether your existing insurance still matches your activities, customer locations and contractual obligations.
How upcover can help
upcover arranges Tech PI and cyber insurance for Australian SaaS and AI businesses and works with more than 80 insurance partners.
- 70,000+ businesses covered across Australia
- 4.9/5 customer rating
- 80+ insurance partners
Get a quote for enterprise software and SaaS insurance.
Frequently asked questions
Does Tech PI cover claims from US customers?
Tech PI may respond to some claims from US customers, depending on what the customer alleges, the territorial and jurisdictional restrictions, and the policy wording. An insurer will assess the circumstances of the claim against the relevant policy terms, conditions, limits and exclusions.
Does worldwide cover include claims brought in the USA?
Not necessarily. A policy may have worldwide territorial cover while separately excluding US or Canadian jurisdiction. Check both the policy schedule and wording to understand whether claims brought in the USA fall within cover.
Does cyber insurance have territorial limits?
Cyber insurance may include territorial and jurisdictional restrictions. Whether claims involving overseas customers, data or incidents are covered depends on the wording. Some policies may also apply sanctions-related restrictions, where relevant.
Is insurance for Australian companies with US customers a separate policy?
Not necessarily. Depending on the insurer and your existing cover, you may need different policy terms, an extension of cover or a separate policy. An insurance broker or the upcover team can help assess the available options.
Written by upcover's editorial team.
This article provides general information only and does not take into account your objectives, financial situation or needs. It is not legal advice. Get legal advice about governing law, venue and the insurance and indemnity clauses in overseas contracts. Insurance availability and cover are subject to underwriting and the terms, conditions, limits and exclusions of the relevant policy. Read the policy wording and its terms and conditions before deciding. upcover arranges insurance products with selected insurers and underwriters and does not compare all general insurers or insurance products available in the market.
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