buy the business,not the surprises.

Start with your loan program and the lender’s written requirements. Property pledged as collateral can trigger hazard and flood insurance requirements. Life insurance depends on the program, collateral, and the business’s reliance on an owner. Review operating coverage separately, including liability and any required workers’ comp. Share the checklist early so your broker can resolve evidence and underwriting questions before closing.

SBA SOP 50 10 8.1, effective October 1, 2026. Insurance Requirements. Source checked October 12, 2026.

Sometimes, but the loan program matters. For Standard 7(a) loans, life insurance is required for certain owner-dependent businesses when the loan is not fully secured, in the amount of the collateral shortfall. For 7(a) Small, SBA Express, and Export Express loans, lenders may follow their internal written policy for comparable non-SBA loans. Other SBA programs have their own provisions. Confirm the applicable rules, insured person, amount, and collateral assignment with your lender before arranging coverage.

SBA SOP 50 10 8.1, effective October 1, 2026. Insurance Requirements. Source checked October 12, 2026.

It depends on the business, but most acquisitions need general liability, property, workers’ comp, commercial auto if there are vehicles, and an umbrella. Many also need cyber, employment practices and D&O. Start from what the target carries today, then close the gaps your lender, customers and investors require.

The company’s policies protect the business, not always you. Directors and officers (D&O) insurance covers claims about your decisions as CEO, and employment practices liability (EPL) covers claims from employees. If you have investors or a board, D&O protects them too. Both are typically bound at closing.

Often, once there are investors. During the search, some searchers buy a small D&O policy for the search entity. At closing, the operating company usually needs its own D&O policy covering the new board and CEO. Investors or lenders may make it a condition of closing.

It varies widely by industry, payroll, vehicles and claims history. A small professional services company usually costs far less to insure than a trades, trucking or manufacturing business. Insurance diligence gives you the number for your target before you finalize the model.

Start right after the LOI, alongside the quality of earnings review. Carriers need loss runs and details that sellers can be slow to share, and lenders usually need certificates on closing day. Leaving it to the last two weeks is a common reason insurance delays a closing.

The CIM or a company overview, the current policies, and about five years of loss runs if you have them. A lender term sheet helps too. We sign your NDA first and never contact the seller or their broker without your OK.