Ghosts from the past

When you sell a company, the new owner normally would take on all liabilities past or present, and you can walk away knowing that – provided the solicitors have done their job well – there should be no future issues which cost you money.

However, if you are a sole trader, partnership, selling the business but not the company or just close down, then you or your company could still face claims from past activities.

A product you supplied some time ago might have caused injury, some work you did may go wrong or some advice you have given may turn out to be incorrect, causing financial loss.

It may be unwise to cancel all insurance cover immediately, and special cover may be required to protect you against these potential long term liabilities. A similar position applies if you have closed down a division, stopped producing a certain line, changed the nature of your business or stopped exporting to North America. There is a risk that your current business activities are covered, but your insurer is not aware of past activities. If a liability claim arises from these defunct activities, then your current insurer could well refuse to handle this. The issue is simple to resolve, as it is just a matter of telling your insurer up front of any past changes.

If you feel that any of the above applies to you and you want to check out the position, ring us immediately on 01325 353888