What Is an 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 necessary medical 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."
- Insurance coverage area can either refer to the geographic area in which an insurance policy's benefits apply or the area in which an insurance company is licensed to write policies.
- The insured may have to get a new policy if they move out of the coverage area.
- The Commercial General Liability Coverage Form (CGL) covers all of the United States.
- Insurance coverage area rules usually do not apply to emergency care.
Understanding Insurance Coverage Area
A common situation where the insurance coverage area is important is student health insurance. If a student, who is covered under their parents’ health insurance policy in Texas, is attending school in California, the policy would not cover a student’s visit to a doctor while they were 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 circumstance where the insurance coverage area comes into play is when driving a car outside of the country where the car’s auto 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, so if an insurer wants to have a large coverage area, it would need to be licensed in each state where it wants to do business.
Insurance Coverage Area and General Liability Coverage
Many businesses take out commercial general liability coverage. General liability insurance is fairly standard across the industry, with forms created by the Insurance Services Office (ISO). One of the main forms issued by the ISO is the Commercial General Liability Coverage Form (CGL), which defines the insurance coverage area as the following:
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 of the form; or
c. All other parts of the world if the injury or damage arises out of:
- Goods or products made or sold by you in the territory described in Paragraph a;
- The activities of a person whose home is in the territory described in Paragraph a, but is away for a short time on your business; or
- Personal and advertising injury offenses that take place through the Internet or similar electronic means of communication
Insurance Coverage Area and Emergency Care
Most health insurance companies are not allowed to charge for additional healthcare costs associated with an emergency if the care or treatment took place outside of the insurer's coverage area.
For example, if you had a life-threatening injury while you were outside of your health insurer's coverage area and sought treatment in a hospital that was not included in your insurer's network, it would have to cover your medical costs as if the treatment took place within its coverage area. This also removes the requirement of receiving pre-approval before visiting an emergency room.
Of course, the keyword here is "emergency," so it is important that the symptom or injury was an actual emergency that could not be treated by a doctor at a later time.