When you transfer ownership of your business, you’re not always eliminating your exposure to risks. Liabilities tied to pastoperations, employee claims or professional services can persist long after the sale is finalised.

Without proper insurance planning, these risks could lead to financial losses, legal disputes or reputational damage for bothsellers and buyers.

While many business owners focus on valuation and contractual terms during a sale, insurance can play a pivotal role insafeguarding against unforeseen liabilities.

However, not all risks are automatically covered. Standard policies often exclude claims arising after ownership changes, sothinking through insurance before you sell is vital.

Insurance considerations when you sell your business

Targeted insurance strategies are critical for addressing post-sale liabilities. For example, public liability insurance shouldremain active until the sale closes to cover incidents related to pre-transfer operations.

Businesses that provide professional services, such as consultancies or law firms, may require run-off professional indemnityinsurance to defend against claims from past clients, even years after the sale.

Workers’ compensation obligations also demand attention. Sellers must ensure their policy remains valid during thetransition if an employee files a claim for an injury that happened before the sale.

Similarly, directors’ and officers’ (D&O) liability insurance may protect former leaders against lawsuits tied to pre-saledecisions, such as regulatory breaches or shareholder disputes.

One of the biggest oversights is assuming all liabilities transfer to the buyer. Policies like key person insurance or buy-sellagreements often need careful review. Some may need to be cancelled, while others may need to be adjusted to reflect newownership structures.