Mergers and acquisitions in the title industry happen. Whenever they occur, it is important to understand the exposures that selling your business may create and how to protect against any claims that may arise from the transactions that closed prior to the sale.
If the sale includes the transfer of assets only, an extended reporting period (ERP) endorsement, often referred to as tail coverage, should be purchased by the seller to provide protection for past transactions back to the retroactive date. (What is a Claims Made Policy?).
If the sale includes both the transfer of assets and liabilities, then the buyer is responsible for acquiring professional liability for the new entity, which should include retroactive coverage.
In either event, it is important to ensure protection against claims. It is always best to contact your E&O team prior to the completion of the sale to review available options.
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This information is provided for the purpose of illustration. The coverage provided is that set forth in the terms, conditions, and limitations of the policy of insurance.