Corporate Successorship: What You Don't Know Could Cost You

In today's increasingly complex and fluid corporate world, companies ' many of which are involved in product liability litigation ' are bought, sold and merge. Consequently, insurers are routinely presented with claims from companies with no apparent connection to the insured named in the policy. These heretofore unknown companies nevertheless claim to be corporate successors to the original insured, and demand coverage under the policy. However, as discussed below, a corporate successor's right to coverage under a predecessor's policy is not a foregone conclusion. Rather, the outcome depends heavily on the specific circumstances of the corporate transaction, along with the particular jurisdiction and state law under which the question is posed. Thus, to protect against paying claims in error, an insurer's first line of defense is awareness of the issues.