Assigned Risk: Transfer of Policy - Ownership Change

The standard WC policy permits a transfer with the carrier's approval. There are several reasons why a transfer may not be a good idea.

After the Bureau makes an ownership ruling, the new owner must complete a new application and send it to the carrier, for the main purpose of securing the new owner's signature and acknowledgment of his obligations.

Once that documentation is received, a decision must be made whether to:
    • endorse the existing policy with the name change of the business (if needed) or the name change of the owner(s), or
    • issue a new policy.

An endorsement to the existing policy might appear to be a more efficient approach, but there are potential conflicts and complications:

    • Which entity will be responsible for the payment of audit additional premiums? Consider additional premiums that could be generated from a subcontractor for which a certificate of insurance had not been obtained (by the prior owner).
    • Are all endorsements appropriate after the ownership change (e.g. Inclusion of Sole Proprietor)?
    • In the case of Employers Liability how will limits be apportioned between the two parties if both are named in the same suit? Might separate legal counsel be needed to represent disparate interests?
    • If the prior owner failed to comply with SECTION FOUR - YOUR DUTIES IF INJURIES OCCUR the new owner could be presented with a claim not covered by the policy.

The standard WC policy permits a transfer with the carrier's approval. Part Six-Conditions, C. Transfer of Your Rights and Duties, says "Your rights or duties under this policy may not be transferred without our written consent."

Although there are no rules specifically prohibiting the transfer of a policy to a new owner, frequently the servicing carrier will (validly) insist a new policy be issued.

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