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Glossary
Business risk

Insurance due diligence

Review of a company's insurance programme before its purchase or sale.

In practice

Seeks hidden liabilities, covers that lapse with the change of control, and run-off needs. Doing it before signing allows for price adjustment; doing it afterwards only allows for discovering the problem.

Where it is addressed

This term is covered in Gobierno corporativo and applies when taking out Due Diligence.

Related terms

Run-offSituation in which a policy ceases to cover new events but maintains cover for previous ones during an agreed period.Discovery periodPeriod after the termination of a claims-made policy during which claims for prior events can still be notified.Directors and Officers (D&O)Insurance that protects the personal assets of directors and officers against claims for their management decisions.First demand guaranteeGuarantee that obliges the insurer to pay upon the simple request of the beneficiary, without discussing the underlying relationship.Machinery breakdownCover that protects against sudden internal damage to equipment due to mechanical, electrical, or operational causes, without an external claim.General averageProportional distribution between ship and shippers of the sacrifice or extraordinary expense made to save the maritime expedition.
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