Mergers and Acquisitions of My Architecture/Engineering Firm
Business is ever changing and your firm might come into a situation that you are in a merger or acquisitions. If this situation does come up for your firm call your insurance agent to find out how this may have an effect on your Professional Liability policy.
There are some steps that will need to be taking in a merger or acquisition situation. Depending on the situation there may be an additional premium that would be charged for the merger or acquisition. The insurance company will ask for the Professional Liability insurance policies and applications of the firms involved. This will determine how the merger or acquisition will be address on the insurance policy. Here is an example of the language in the policy with regards to mergers and acquisitions.
Newly acquired subsidiary means any entity, newly formed or acquired by a Named Insured during the policy term, in which such Named Insured has more than a 50% legal or beneficial interest. However, no such entity will be deemed a newly acquired subsidiary beyond ninety (90) days after the Named Insured acquires or forms it. For coverage to continue beyond the first ninety (90) days, the following conditions apply:
- within ninety (90) days of such formation or acquisition, the Named Insured must provide the Insurer with full particulars of such newly acquired subsidiary;
- after receipt of such notice, the Insurer must agree to endorse this Policy to insure such newly acquired subsidiary; and
- the Named Insured must pay the additional premium, if any, and agree to any amendment of the provisions of this Policy by reason of such formation or acquisition.
Coverage exists for claims made against a newly acquired subsidiary only if, prior to the acquisition date or formation date, none of the Insured’s, directors, officers, principals, partners, or insurance managers of the Named Insured or such newly acquired subsidiary knew of any act, error, omission, or event that could reasonably be expected to become the basis of that claim.
Every policy has slightly different language, read your policy to have a full understanding of how a merger and acquisition are handled with your insurance company.
If there are any questions with regards to mergers and acquisitions on your Professional Liability policy please call or email your Professional Underwriters agent for assistance.