Insurance Due Diligence is a core piece of diligence often missed by Searchers. Usually the case because Searchers have never heard of it or have no clear partner to help - leaving large risk unchecked. Sharing a quick overview today to scale understanding & awareness.

Core request to seller - if nothing else, you owe it to yourself to request and review all in force insurance policies and a 5 year loss run for each policy. The Seller can request this from their insurance broker and it requires little of their time (a big plus when you have several requests out to them at once.) This will show two key things: 1) if costs are appropriate 2) how the business has managed risk over a five year period.

What to review:

Policy Diligence
-Are their missing policies needed to run the business?
-Are coverage limits appropriate ? Are there any concerning coverage exclusions?
-Are the policies rated correctly (KEY) Check the rating of each policy, whether it be sales, payroll, building value, or vehicles###-###-#### listed. If the your policies are under-rated, you have hidden cost coming post close....

Loss Run Diligence
-Have there been past losses? Did the seller migrate the risk of a repeat loss?
-Are there any open or pending claims?

Employee Benefits Diligence
-Request copies of past monthly medical invoices. This will show cost and current enrollment
-Request a Summary of Benefits. This will show all employee benefits and any employer contributions

Stock or Asset Deal?
-If Stock, you can likely keep all insurance in place and optimize post close as needed
-If Asset, you will need new policies. You are intentionally severing past liability with your new entity.

Broker Partnership
-Like the rest of your deal team, find someone you can trust that has a process you align with.

Best effort to keep things "short," comment below what questions you have or additional detail you'd like.

Quick resource (25min mark) - Recorded Live Oak Due Diligence Session with ^Searchfunder member‌ ^Searchfunder member‌ ^Searchfunder member 00d9b147286a4ed52a53441c2fa76c7c&_x_zm_rhtaid=719