Am I Being Scammed? Liability Insurance Concerns After Selling My Business
To sum it up: I recently sold my business through a share sale and have since ceased the manufacturing operations. My insurance provider insists that our policy remains unchanged until its expiration in May 2025, despite our operations ending in September 2024.
I understand that we should maintain some level of coverage, but does it really make sense to keep full coverage? This feels excessive. We currently pay $14,000 per year in insurance, mainly because our client base was largely American, and lawsuits are unfortunately common there. I’m having a hard time trusting the insurance company’s advice, as it seems biased towards keeping us covered for the entire term of the policy.
I would greatly appreciate any insights or advice on this situation. Thank you!
It sounds like you’re in a complicated situation, and it’s understandable to feel concerned about the insurance policy after the sale of your business. Here are a few points to consider:
Policy Terms: Review your policy documents carefully. There may be clauses regarding changes in operations or ownership that could affect your coverage. It’s crucial to understand your obligations and rights under the contract.
Liability Exposure: Even though you ceased operations, there may still be potential liability exposure linked to past activities. If someone were to file a claim related to operations that occurred before the sale, you might still be covered under your existing policy.
Consult with an Expert: Consider consulting with an insurance broker or a legal expert who specializes in business transactions and insurance. They can offer tailored advice based on your specific circumstances and help you understand if you’re still at risk or if adjustments can be made.
Communicate with the Insurer: Have an open discussion with your insurance company about your situation. Highlight that you’ve ceased operations and see if they can provide clarification on why the policy should remain unchanged.
Explore Alternatives: If it turns out that you don’t need full coverage, you could look into reducing your coverage or switching to a different policy that better reflects your current situation.
Document Everything: Keep records of all communications with the insurance company and any expert consultations. This documentation will be useful if further issues arise.
It’s understandable to feel uneasy, but with the right information and support, you can navigate this situation more confidently. Good luck!