Deal Point: A corporation is in the process of selling assets that were once owned by a coal company that has gone out of business. The assets being were utilized in a non-coal division of the coal company. The purchaser is concerned that it will be deemed a “successor” to the coal act under certain federal acts and is worried about potential liabilities that it may inherit because of this. The selling corporation is willing to provide an indemnity for this liability, but because of its low credit rating, the potential buyer is unwilling to accept the indemnity.

Transactional Insurance Solution: The buyer purchasers a Legal Contingency Insurance policy insuring against the liabilities it would have if it were determined to be a “successor” under the act in question. The policy also provides for the costs of defending against any attempt to characterize the buyer as a “successor”.