Mergers, Acquisitions, Spin-offs, and Dissolutions of Architect/Engineering Firms

Mergers, Acquisitions, Spin-offs, and Dissolutions of Architect/Engineering Firms

If your firm is looking at merging or acquiring another firm review your firm’s policy to understand how this will work.

Here is an example of a policy’s wording:

Mergers, Acquisitions, Spin-offs, and Dissolution

If, during the Policy Period, the Named Insured acquires or forms an entity that performs Professional Services, coverage will be provided for such acquired or formed entity for a Wrongful Act, Pollution Incident or Network and Information Security Breach committed after the Named Insured acquired or forms such entity. Coverage for such entity will end ninety (90) days after the acquisition or formation of such entity, or the end of the Policy Year, whichever is earlier unless the Company has agreed to provide such coverage by endorsement.

There are several ways in how the insurance companies may handle a merger or acquisition.  They will ask for the other entities’ professional liability application and loss history report to determine how the insurance will be handled.  The insurance company may take on the acquired entity on your firms’ current professional liability policy.  Or the insurance company may have a whole new policy set up for the ‘new entity’ and the original entities may need to obtain an extended reporting period.

There are many potential outcomes of a merging or acquired firm’s professional liability policy.  It will depend on the information that is gathered about each firm and what the insurance company will determine is a fit for their specific program.  As soon as you learn of the potential merger, it is always best to determine the possibilities of the insurance company with your insurance agent.

To determine how the merging or acquired firms will move forward with your professional liability policy, please call, or email, your Professional Underwriters agent for assistance.mergers acquisitions

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