SSRU offers Product Run-Off coverage as a solution for managing liabilities which may not be adequately covered by existing or legacy liability insurance programs. Advantages include:
- Protection for either the seller or buyer of a business against the risk of future claims arising from past products sold, discontinued products, or completed operations.
- Protection for gaps in coverage when a policy is converted from a Claims-Made policy to an occurrence policy.
- Acquiring companies can top up legacy limits against future claims.
- Selling companies can purchase coverage to satisfy the terms of a purchase and sale agreement.
Target Classes Include:
- Coverage limits up to CAD/USD 10M.
- Primary or Excess coverage on a stand-alone, quota share or excess of loss basis.
- Non-cancellable policy. Policy term of up to 5 years, with option to renew.
- Claims-Made form.
- Segregated product (carve out) coverage available.
- Stand-alone policy with separate limits from the Insured’s operational policy.
- Protects an acquiring company's balance sheet/insurance program from claims arising from acquired past products liability.
- Coverage can be tailored to the needs of the Insured.
- Removes uncertainty when legacy policies are unclear or not available.
Product Run-off Coverage in Action
- A large corporation sells a subsidiary and is contractually obligated to provide past products coverage.
- An equipment distributor acquires the assets of a sawmill equipment manufacturing company. Several years later, a lawsuit is brought against the manufacturer's product claiming bodily injury occurring prior to the buyout. The acquiring company is required to pay a multi-million dollar claim due to inadequacy of limits on the manufacturer's occurrence policy.
- A bicycle parts manufacturer is acquired by a recreational products manufacturer. Historically, the bicycle parts manufacturer purchased $10M of products liability coverage, while the acquiring company purchased $20M. The acquiring company can buy a Product Run-Off policy to retroactively increase the lower limits of the acquired company's policy.
- The assets of a dormant manufacturer of gas fireplaces and barbeques are acquired by a consolidator. Past policies of the acquired entity are unavailable for review. Product Run-off coverage provides contract certainty with respect to the past-products liabilities of the acquired company.