An engineering practice sale does not automatically transfer responsibility for all previous professional services to the purchaser.
The insurance position depends partly on how the transaction is structured.
Important questions include:
- Is the company itself being sold?
- Are only the business assets being purchased?
- Who retains liability for historical work?
- Will the existing PI policy continue?
- Does the purchaser’s insurer agree to cover prior work?
- Is run-off cover required?
- Are there known claims or circumstances?
An asset sale can be particularly different from the sale of shares in the existing company.
Professional Indemnity claims may arise years after engineering work was completed, so responsibility for historical projects should be addressed clearly during the sale.
Both the sale agreement and the insurance arrangements should be reviewed before cover is cancelled or transferred.
