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Quote of the Day - A man is known by the company he avoids. - Anonmyous
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Function Over Form: Insurance Protects Successor Companies

All right. Let's get back at it here, and cover an opinion that came out of Ohio last week on insurance coverage.

What happens to insurance coverage when a company buys the assets of another company? Well, if you're in California, the general rule is that it has to be covered in the contract. Otherwise, the policies don't transfer.

If you're in the 9th Circuit (other than California), then the policies follow the liabilities. That is to say if the liabilities transfer to the new company, then so do the insurance policies.

Before last week, that question hadn't been squarely addressed in Ohio. The Glidden paint companies have engaged in a series of mergers since the late 50's.

Now, we're on Glidden III in terms of corporate structure. Glidden has been sued for personal injuries arising from lead paint.

When Glidden III turned the claims over to its insurance company, the claims were denied. Lumbermans Mutual essentially said to Glidden III, "Who are you?"

The carrier claimed it had insured the earlier iterations of Glidden, but after the company merged and merged several times, the policies didn't transfer.

The trial court agreed, and found for the insurance company: No coverage.

The Ohio Eighth District Court of Appeals disagreed, and reversed, following the 9th Circuit rule rather than the California rule.

Policies track liability. If a successor company can be held liable for the sins of a predecessor, then the insurance from the predecessor company protects the successor company.

Glidden is glad.

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Printer friendly page Permalink Email to a friend Posted by J. Craig Williams on Monday, December 27, 2004 at 09:16 Comments Closed (0) |
 
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