Territorial Limits

What Does Territorial Limits Mean?

In liability insurance, territorial limits refer to the geographical areas or locations where an insurance policy provides coverage to the insured. If an incident occurs outside these specified territorial limits, the insurance policy may not offer coverage. For example, a liability insurance policy that covers compensation for personal injury or property damage while conducting business may only be valid within the “territorial limits” outlined in the contract. Because the territorial scope of a policy directly affects whether a claim will be paid, business owners reviewing their general liability insurance should confirm where their coverage applies before signing on.

Insuranceopedia Explains Territorial Limits

Territorial limits define the specific areas or locations where coverage is applicable or excluded. For example, a provision on territorial limits may read: “Territorial limits means anywhere in the world, except North America, where the policy will only apply in respect of products exported into those countries. North America refers to the United States of America and/or Canada, including any state or territory incorporated in or administered by the United States of America or Canada.” Companies that ship products into the United States or Canada often need to pair their primary liability policy with a commercial umbrella insurance policy or a separate North American extension to fill any gaps the territorial clause leaves open.