In late September, the company Michael Kors made a bid to purchase fashion giant Versace for $2.1 billion. A contingency insurance policy would absolutely be needed for cases like these involving large purchases. But what is this type of insurance? If you aren’t sure, this blog can clear up a few things for you.
Contingent business interruption insurance is essential to businesses; it protects the buyer if something arises between them and the seller during acquisition or negotiation of a merger. In the same stroke, it also blankets the supplier as well.
Specializing in high end personal lines and commercial lines insurance, Owens Group can cater to your needs. Specific contingency insurance (SCI) is designed to keep the buyer and seller financially safe. If you aren’t sure what SCI is and if your business needs it, then read this blog. This is how SCI can help businesses:
Why Your Business Needs It
In most cases, the buyer and seller are going to take very different stances on certain situations, especially when it has a financial impact on either entity. An example of this includes when the seller is involved in a litigation dispute that won’t be resolved until after the transaction is completed. What does this do to both parties? It forces both parties to evaluate the likelihood of prevailing in the case, as well as potential financial loss for the company. It’s natural that the seller will seek to neutralize any potential losses, while the buyer will feel differently. The buyer will have a risk-averse view about the entire thing. When this happens, resolution suddenly becomes complicated.
What SCI Covers
SCI is effective at what it does; it helps facilitate a mutually acceptable solution for both parties. Purchasing an SCI policy is exactly what your business needs. It adequately indemnifies the buyer from the financial impact of a specific contingency, thus transforming a contingent liability into a indisputable (and often deductible) expense. Examples of the issues covered by SCI include:
- Environmental issues
- Tax Disputes
- Specific Indemnities
- Successor Liability
Contingency insurance is an absolute necessity when you’re a business making big purchases. This type of insurance makes sure that if something goes awry, you won’t be caught in the crossfire. This way you won’t be left to pick up the pieces. Contact your local insurance agent today and find out more information.
About Owens Group Insurance
Owens Group Insurance, a completely family-owned and managed operation spanning three generations, has provided families and businesses with comprehensive insurance solutions since 1957. Our experience in the industry, knowledge of the sector, market access, attention to detail, partnerships with leading insurance carriers, meticulous customer service, and commitment to providing innovative solutions helps us protect our clients’ assets, employees, financial security, businesses, and families. We have a team here that is ready to help you protect your assets. Contact us today at (800) 26-COVER to learn more about how we can help you.