Change in Control & Transaction (Management Liability)

A Change in Control happens when another entity buys most of the company's voting shares, or gains the right to appoint most of its directors, or otherwise takes control of the firm's affairs. A Transaction usually means a merger, a consolidation, or a sale of nearly all the company's assets. These events trigger real changes to the policy. Cover for new wrongful acts usually stops on the transaction date, because the buyer's own policy takes over from then. Automatic run-off cover switches on for wrongful acts from before the deal, and insureds must also tell the insurer about the change. Companies planning a deal need to understand these terms, so that cover for directors and officers keeps running without a gap. The policy schedule usually states the run-off period on offer. This is often 72 months, or six years, sometimes longer.

A Change in Control happens when another entity buys most of the company's voting shares, or gains the right to appoint most of its directors, or otherwise takes control of the firm's affairs. A Transaction usually means a merger, a consolidation, or a sale of nearly all the company's assets. These events trigger real changes to the policy. Cover for new wrongful acts usually stops on the transaction date, because the buyer's own policy takes over from then. Automatic run-off cover switches on for wrongful acts from before the deal, and insureds must also tell the insurer about the change. Companies planning a deal need to understand these terms, so that cover for directors and officers keeps running without a gap. The policy schedule usually states the run-off period on offer. This is often 72 months, or six years, sometimes longer.