Subject: Is This a Scam? Liability Insurance After Selling My Business
Short version: I recently sold my business through a share sale and have stopped operating the manufacturing side as of September 2024. However, my insurance provider informs me that the policy will remain unchanged until it expires in May 2025.
I understand that we may need to keep certain components of the insurance, but maintaining full coverage seems excessive. Is this a scam? It feels unreasonable. We’re currently paying $14,000 a year for insurance, primarily because many of our clients are American, and I’ve heard they tend to be litigious. I’m having a hard time trusting the insurance company since it seems they’re just looking to keep us on the policy for their benefit.
I would greatly appreciate any advice on this situation! Thank you!
It sounds like you’re in a tricky situation with your liability insurance, especially after selling your business and ceasing operations. Here are a few points to consider:
Review the Policy Terms: First, carefully review the policy terms to understand the coverage and any obligations you have after selling the business. Some liability insurance policies may require you to maintain coverage for a specific period, regardless of your operational status.
Consult with Your Agent: Reach out to your insurance agent for a detailed explanation of why the policy must remain unchanged until expiration. They should be able to clarify the reasons and any legal implications for discontinuing the policy early.
Seek Legal Advice: If you’re still concerned about the fairness of the situation or potential scam, it might be worth consulting a lawyer who specializes in insurance or business law. They can provide guidance tailored to your specific circumstances.
Evaluate Coverage Needs: Since you are no longer operating, you might not need full coverage. Discuss options for reducing your coverage or transitioning to a more suitable policy for your current situation with your agent.
Consider Alternatives: If you’re unhappy with your current insurer, it might be worthwhile to shop around for other options. Sometimes, insurers may offer policies that cater specifically to businesses that have ceased operations.
Document Everything: Keep records of all communication with your insurance company and any decisions made regarding the policy. This might help in case you need to dispute anything or seek further advice in the future.
It’s understandable to feel wary, especially with high premiums and the potential for liabilities. Staying informed and seeking the right advice can help you navigate this situation more effectively.