Are there any insurance tips for a merger or acquisition that I should be aware of?

It is important for consumers to know as much as they possibly can about mergers and acquisitions. Sheila Mulrennan, president of the New York-based Insurance Archaeology Group, explains, "A key component of standard commercial general liability policies is that they never expire. If a claim is filed against a policyholder 20, 30, or even 40 to 50 years after property damage or injury occurs - as often happens in cases of environmental pollution - a policy that was in effect when the damage occurred is still effective'.

For a proper insurance audit, Mulrennan suggests the following tips:

• Locate the selling or merging company's insurance records. By doing so, you'll make sure that your information hasn't been changed or removed. Keeping up with your documents is crucial because of the fact that insurance companies constantly clean out their offices, and important documents can get tossed inadvertently.
• Note the former owners of the merging or acquired company and note when they owned it. In order to go along with any operations, you are going to need copies of liability policies. Mulrennan claims, "Waiting until a claim arises may result in multiple entities competing for the same limits, where you'll have no documentation and no hope for cooperation".
• Find the "hidden liabilities" within the other company. Environmental issues, workers compensation claims, employee issues like payroll, union contracts and claims related to discontinued products and international coverage - are types of liability considerations. Keep in mind that you could be saddled with financial burdens if a claim arises after the merger and you're unprepared.
• Make sure that you carefully look at the coverage provided by the policy. Some commercial policies contain endorsements, expensive claims-handling arrangements, high deductibles, and are usually highly customized. You might face other problems along the way such as nearly exhausted aggregate limits or insolvent insurers that can lead to improper protection against future losses.
• Before you buy or merge, transfer the insurance policies into your company's name. Policy transfers aren't required by law, but insurance companies might deny coverage on the grounds that an explicit assignment or transfer is missing without a proper policy transfer.
• Review the coverage to verify that indemnification is within the scope of the policies, if you an indemnification clause for claims arising out of pre-sale circumstances.