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Territory in insurance refers to the geographical area where your insurance policy is valid and where coverage applies.

What is a Territory in Insurance?

In more detail, a territory in insurance is a defined geographical region where the insurance policy provides coverage. This means that any claims you make will only be considered if the event leading to the claim happens within this specified area.

For example, if you own a business in Auckland, your insurance policy might specify that coverage is limited to New Zealand. If your business assets are damaged or stolen in Auckland, your policy will cover the loss. However, if you expand your business to Australia and experience a loss there, your New Zealand-based policy might not cover it unless the policy includes Australia in its coverage territory.

Territory Graphic Insurance Glossary

Key Components of Territory

There are three key components of a territory in insurance:

1. Geographical Boundaries

The primary component is the specific geographical boundaries within which your insurance policy is effective. This can range from local areas, like a specific city or region, to broader areas, like an entire country or multiple countries. These boundaries define where your business operations are protected.

2. Policy Terms and Conditions

Each insurance policy comes with specific terms and conditions that outline what is covered within the designated territory. This includes detailed descriptions of the types of risks covered and any exceptions. It’s crucial to read and understand these terms to know exactly how your territory is defined and what it encompasses.

3. Extent of Coverage

The extent of coverage within the territory is also a critical component. This refers to the level of protection your policy offers within the geographical boundaries. For example, it might cover property damage, liability claims, and other business-related risks within the defined territory. The extent of coverage can vary significantly between policies and insurance providers.