insurance due diligence, in dollars.

Insurance due diligence is a review of a target company’s insurance before you buy it. It checks what the business pays, what it’s actually covered for, its claims history and what coverage you’ll need on day one. The goal is to find gaps and costs early, so they show up in your model instead of after close.

A typical review covers current policies and premiums, coverage gaps and limits, about five years of loss runs, contract and lender requirements, and the cost of the go-forward program. Riza’s report puts each finding in dollars: go-forward premium, EBITDA impact and one-time costs at close, such as D&O tail and collateral.

Usually the current policies and declarations pages, about five years of loss runs, the workers’ comp experience mod worksheet, open claims, key customer and lease contracts, and the lender’s term sheet. The CIM helps with context. If the seller is slow to share, we start with what you have.

As early as possible, ideally right after the LOI is signed and alongside the quality of earnings review. Starting early leaves time to price findings into the deal, negotiate with the seller and line up coverage, including any reps and warranties policy, before closing.

Usually about a week once we have the documents: the CIM, current policies and loss runs. The biggest variable is how quickly the seller shares them. Tell us your close date and we’ll plan the review around it.

With Riza, the diligence review comes with no obligation to buy insurance from us. Some advisors charge a separate fee or fold it into a placement. We sign your NDA before you share anything.

A loss run is an insurer’s record of a company’s claims: dates, amounts paid and money set aside for open claims. In a deal, it shows how often things go wrong and how costly they get, which drives what the next carrier will charge. Ask for five years from every carrier.

An experience mod is a number that adjusts a company’s workers’ comp premium based on its injury history compared with similar businesses. 1.00 is average, and above 1.00 costs more. A rising mod usually means higher premiums after close, so it belongs in your model.

Occurrence policies cover incidents that happen during the policy period, whenever the claim is filed. Claims-made policies, common for D&O, EPL and professional liability, cover claims made while the policy is active. In a sale, claims-made coverage usually needs a tail so past acts stay covered.

Generally not in an asset purchase: you buy the assets and start new policies, while the seller’s policies stay with the seller. In a stock purchase, policies usually stay with the company, but change-of-control terms can end or limit some coverage. Either way, check for gaps before closing.

A quality of earnings review tests whether the earnings are real. Insurance due diligence tests whether the business is properly protected and what that protection will cost after close. Its findings often feed into the QoE, for example as an adjustment for a higher go-forward premium.

Yes. We sign your NDA before you share anything, and we never contact the target, its broker or its carriers without your OK.