predecessor firm coverage
A provision found in professional liability policies written mainly for lawyers
or accountants that affords coverage for the acts of the firm that preceded
the current insured organization. For example, assume that two accountants,
"A" and "B," form a partnership. After 5 years, they merge their practice with
an existing partnership consisting of accountants "C," "D," and "E." The predecessor
firm provision in the professional liability policy purchased by this new combination
would provide coverage for errors and omissions committed during the AB partnership
even if claims arising from those errors or omissions are not made until after
the merger of the two firms.
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PLI VII.B