Our insured is a buying agent for Autozone. The insured company purchases parts for Autozone from a Chinese manufacturer. Autozone then takes possession of the goods at the port in China. From there, the items enter the United States through the port in Los Angeles. They clear customs and then are transported via truck to Mexico through Texas to be sold by Autozone in Mexico.
The question is: would someone who bought the product in Mexico have any way to make a claim against our insured?
Georgia Subscriber
What you have to check here is the definition of coverage territory in your policy. For example, in the standard CGL form, coverage territory can be all parts of the world if the injury or damage arises out of goods or products made or sold by the named insured in the United States, Puerto Rico, and Canada. Of course, any lawsuit against the insured has to be filed in one of these same territories in order for responsibility to pay damages to be established.
In your situation, if the definition of coverage territory is the same as that in the standard CGL form, the only way for there to be liability coverage would be if the products were made or sold in the United States and the injured party then sues in the U.S. From how you describe the situation here, it appears that the insured does not make or sell the products in the U.S., so anyone injured after a sale in Mexico is not going to have the insured's policy pay for damages. Now, we are talking just about insurance coverage here and not legal liability. So, the insured may very well be sued and be held liable in a Mexican lawsuit, but the insurance policy that the insured has probably won't provide coverage, depending on the definition of coverage territory.
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