Selling a business can affect several insurance policies and should be reviewed before settlement.

The insurance arrangements for the seller do not automatically become the buyer’s insurance arrangements.

Entity, settlement and cancellation timing #

Insurance policies are generally issued to a particular legal entity and based on its activities, ownership and other underwriting information.

If the buyer operates through a different entity, they will generally need their own insurance arrangements.

Existing policies may still be required until:

• Settlement occurs
• Trading stops
• Employees transfer or cease employment
• Property or vehicles are transferred
• Contractual responsibilities end

The correct cancellation date can vary between policies.

Claims-made policies and run-off #

If the business holds Professional Indemnity Insurance or another claims-made policy, claims can arise after the sale from work performed beforehand.

Run-off cover may therefore need to be considered.

The sale agreement may also specify how long certain insurance must be maintained.

Other policies to review can include:

• Public Liability
• Business Insurance
• Commercial Motor
• Workers Compensation
• Management Liability
• Cyber Insurance
• Contract Works
• Plant and Equipment

Some policies may be cancelled, adjusted or retained for a period after settlement.

Tell us about the proposed transaction early #

Useful information includes:

• Proposed settlement date
• Whether assets or shares are being sold
• Which legal entity will continue
• What activities will cease
• Whether employees are transferring
• Whether the seller retains any contractual obligations
• Insurance requirements in the sale agreement

Webber Insurance can review the insurance implications of the transaction. Legal and tax aspects of the sale should be discussed with the appropriate advisers.

Contact our team if you are planning to sell your business.