Insurance companies that offer worldwide coverage should take notice. Contracting to provide such broad coverage may subject insurers to personal jurisdiction of the US Courts in states where the insured resides or the covered event occurs – even if the insurance company has no employees, agents or offices in the state and does not otherwise conduct business there. In July 2012 the US Court of Appeals for the Fourth Circuit (the Court) ruled that a district court can exercise personal jurisdiction in precisely those circumstances. The Court reasoned that exercising personal jurisdiction over the insurer was a fair quid pro quo for the increased premiums the insured paid for worldwide coverage. Further, because the insurance company contracted to defend the insured throughout the policy territory, the exercise of personal jurisdiction was not unreasonable. While other means to avoid litigating in an undesirable forum remain available, insurance companies should not count on successfully challenging personal jurisdiction after agreeing to cover an insured anywhere in the world.
Our publication discusses the Fourth Circuit’s decision in In ESAB Group, Inc. v. Zurich Insurance plc including implications for insurance companies that offer worldwide coverage.