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<b><i>Practice Tip:</i></b> Insurance Issues in M&A Transactions

By Thomas S. Novak

Your manufacturing company has announced a new transaction. It will either sell a substantial portion of its assets, or have its stock acquired by another company. As in-house counsel for the seller, you become consumed in responding to due diligence requests by the purchaser, producing customer contracts, financial information, litigation reports, regulatory filings, etc. One area that may be overlooked or left to an insurance broker is the effect of the transaction on your company's insurance program. But delegating insurance issues to a broker who may not be sophisticated in corporate mergers and acquisitions (M&A) may leave a hole in your company's insurance coverage and render your company and its management naked (at least risk-wise).

Product liability is an area where there may be a gap in coverage as a result of an M&A transaction. Product liability insurance is one of the few coverages that is written on either an occurrence or claims-made basis, depending on the extent of the insured's risk and financial ability to pay the premium. This article explores some of the insurance issues arising out of M&A transactions.

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