Insurance in a business acquisition: review policies, claims history, change-of-control, run-off and liability cover before closing.
BRANDAUER Rechtsanwälte
Salzburg law firm for corporate, company and transaction law
Every transaction is handled by a coordinated team of lawyers, legal staff and specialists. In company acquisition matters we look at structure, contract, tax and liability together.
Insurance is often reviewed late in a business acquisition. Yet public liability, D&O, cyber, product liability or property insurance may be decisive after closing.
The buyer wants to know whether legacy claims are covered and whether protection continues after the acquisition. The seller wants to avoid unlimited exposure for unclear claims.
This post complements the due diligence checklist, W&I insurance and the disclosure letter.
Answer two questions on policies and continuation of coverage.
Already know you want to get in touch? Go straight to the enquiry form.
Not only policies matter, but also unpaid premiums, exclusions, open claims and termination rights.
If policies, claims and consent requirements are known, warranties, indemnities and closing deliverables can be drafted clearly. Record which coverage continues and which cover is newly taken out.
If policies, claims history or insurer confirmation are missing, the buyer should not accept only a general warranty. Request concrete documents, an indemnity for legacy claims or a closing condition.
Even if no claims are known, limits, exclusions, deductibles and termination rights should be reviewed. The operational handover needs seamless protection from closing.
A policy list says little about whether a specific risk is covered. Policyholder, insured activities, limit, deductible, exclusions, notification periods and open claims matter.
In a share deal contracts often remain with the legal entity, but change-of-control or termination rights may still apply. In an asset deal policies and policyholder often need to be reorganised.
The purchase agreement should include a policy list, warranties on premium payment and known claims, information duties until closing and a clear rule for legacy claims. If certain cover is essential for operations, continuation may become a closing condition.
For D&O, cyber or product liability, review whether run-off or tail coverage is needed for past periods. This is particularly relevant if management, product lines or IT systems change after closing.
The table shows typical policies and key deal questions.
| Policy | Review question | Contract solution |
|---|---|---|
| Operations Public liability | Are activities fully covered? | Warranty and continuation evidence |
| D&O Management liability | Past acts covered? | Run-off or tail cover |
| Cyber Cyber policy | IT incidents and notifications? | Disclose claims history |
| Product Product liability | Legacy products and recalls? | Indemnity for known cases |
| Property Property insurance | Sites and equipment covered? | Align handover and new policy |
Caution: W&I insurance does not automatically replace the review of ordinary operating policies. It covers only what the specific policy and purchase agreement actually reflect.
A short insurance plan is useful: which policies continue, which require consent, which will be newly taken out and who notifies open claims? The plan should be aligned with broker or insurer before closing.
For buyers, seamless protection from completion is key. Sellers should disclose known claims and limit the scope of their warranties. Insurance should not become a topic only after the loss has already occurred.
Often contracts remain with the legal entity. Nevertheless, change-of-control clauses, termination rights or information duties may be triggered. This must be checked before closing.
It secures insurance protection for past periods, for example under D&O or claims-made policies. Whether it is needed depends on policy, risk and transaction structure.
A warranty helps, but it does not replace policy review. Buyers should see the policy, claims history, premium status and continuation of coverage in concrete terms.
When buying a company, structure, review and contract decide. Call us directly or send an email, callback within one business day.
Address
BRANDAUER Rechtsanwälte GmbH Giselakai 51 5020 Salzburg
Phone
+43 662 6280000