What is Insurance Coverage Area

Insurance coverage area refers to the geographic region in which an insurance policy’s benefits apply. The insurance coverage area for a travel health insurance plan, for example, might be defined as “anywhere in the world.” This definition means that the policyholder can obtain medically necessary treatment anywhere and be entitled to the policy’s benefits, assuming the policy’s other conditions are met. Insurance coverage area is also known as "coverage territory."

BREAKING DOWN Insurance Coverage Area

A common situation where insurance coverage area is important is student health insurance. If a student, who is covered under her parents’ health insurance policy in Texas, is attending school in California, the policy would not cover a student’s visit to an emergency room while she was at school if California was outside the plan’s coverage area. The student might need to purchase a separate health insurance plan through the university to get local insurance coverage for medical treatment.

Another common situation, where insurance coverage area comes into play is when driving a car outside of the country where the car’s insurance policy was written. A vehicle owner with an auto insurance policy that was written in the United States might find that the policy does not cover any incidents that occur in Mexico. The owner would need to purchase supplemental insurance to expand the insurance coverage area before taking a road trip south of the border.

Insurance coverage area may also refer to the geographic region in which an insurance company is licensed to write insurance policies. The insurance coverage area for a regional auto insurance company might be Texas, Louisiana and Arkansas. A prospective customer who lived in Oklahoma would not be able to purchase a policy from this insurance agency because the state is outside of the agency’s coverage area. Insurance companies are licensed and regulated at the state level. An insurer that wants to have a large coverage area will need to be licensed in each state where it wants to do business.

Insurance Coverage Area and General Liability Coverage

When it comes to liability coverage, the definition of insurance coverage area, according to the Commercial General Liability Coverage Form (CGL), is: 

a. The United States of America (including its territories and possessions), Puerto Rico and Canada;

b. International waters or airspace, but only if the injury or damage occurs in the course of travel or transportation between any places included in Paragraph a. above; or 

c. All other parts of the world if the injury or damage arises out of:

  1. (1) Goods or products made or sold by you in the territory described in Paragraph a. above; 
  2. (2) The activities of a person whose home is in the territory described in Paragraph a. above, but is away for a short time on your business; or 
  3. (3) “Personal and advertising injury” offenses that take place through the Internet or similar electronic means of communication