Virtually every merger or acquisition includes representations or requirements regarding insurance. Every corporate counsel knows that warranties regarding the adequacy of insurance coverage must be verified. Every sophisticated director and officer will require ongoing insurance coverage and indemnification after the closing of a merger. Many experienced counsel are savvy enough to watch out for basic insurance traps like anti-assignment provisions.
But beyond the basics, really good insurance due diligence in transactions—the kind that will avoid forfeiture of coverage and fulfill the parties’ reasonable expectations—requires understanding of how a transaction may affect current insurance coverage and compliance with contractual insurance requirements. To ensure that valuable insurance coverage is preserved, maximized and performs its intended purpose, here are three “best practices” for insurance due diligence in M&A transactions.
Excerpted from Deal Lawyers, May/June 2016. To read the full article, please click here (subscription required).