When expanding to Europe, one of the costliest mistakes a foreign company can make is assuming their 3PL partner’s insurance covers the full value of their inventory. It doesn’t.
If your 3PL’s warehouse in the Netherlands or Dublin has a fire, flood, or goes bankrupt, you are not fully protected by their policy. You will likely recover only a fraction of your stock’s value.
The Liability Gap
Logistics providers in Europe often operate under standard logistics conditions (like these in the Netherlands) that strictly limit their financial liability. This limit is typically a low fixed amount per kilogram.
For a shipment of high-value goods like supplements or electronics worth $120,000, the 3PL’s liability might cap the payout at less than $10,000. The rest is your loss.
How to Secure Proper Coverage
Your insurance strategy depends on your business structure.
1. You are selling from your non-EU company (e.g., from the US or Australia)
This is the most common setup for new market entrants.
- Stock Insurance: Contact your broker in your home country. Instruct them to extend your existing business insurance to cover inventory held at a third-party location in the EU.
- Product Liability: You must also extend your product liability policy to explicitly cover sales to consumers and businesses within the European Union.
2. You have a registered EU subsidiary (e.g., a Dutch B.V. or Irish Ltd.)
Operating through a local entity gives you a significant advantage.
- Direct Access: Your EU company can purchase insurance directly from local European providers.
- Benefits: This often results in more competitive pricing and policies specifically designed for local laws and consumer protection standards.
Our main advice is to not fully rely on your fulfillment partner for insurance. Their legal obligation is minimal. Protecting your assets in Europe is your responsibility. Review your 3PL’s liability clause, then call your insurance broker.
If you need any help, feel free to contact us below for an evaluation of your case:
