Tax Liability Insurance
The uncertainty surrounding identified tax issues can be an obstacle to strategic planning and getting an M&A deal across the line. Tax Liability Insurance can remove a specific tax concern from a transaction that might otherwise be a deal breaker. Tax Liability Insurance effectively transfers the risk of an identified tax issue from the taxpayer to the insurer, providing certainty to the parties involved.
Benefits of Tax Liability Insurance
- Reduces or eliminates a contingent tax exposure arising from a transaction, investment or other tax position where the underlying legal conclusions may be subject to future challenge by the tax authorities.
- Provides greater purchase price certainty for a buyer in the M&A context by ring fencing an identified tax exposure.
- Enables a clean exit for sellers by eliminating a long-tail contingent exposure.
- Coverage can be structured for the failure of the insured to realise certain tax benefits in a transaction or for an existing/ongoing corporate tax issue such as the validity of tax deductions.
- Provides support for the position put forth in a tax opinion prepared by the tax payer’s advisors.
- Covers all the tax consequences of a particular tax exposure, including federal, state, provincial, local and foreign taxes, tax contest costs or defense costs, interest, non-criminal fines and penalties and interest on such fines and penalties and gross up of taxes payable on the insurance proceeds.
Tax Liability Insurance Services
Aon's specialist M&A insurance advisers:
- Structure bespoke transaction liability insurance solutions to capture the benefits detailed above.
- Evaluate liabilities, indemnification obligations and other issues associated with acquisitions and divestitures to address potential liabilities.
- Access the global insurance markets to ensure the most competitive pricing and terms.
- Negotiate bespoke policy wording uniquely tailored to your transaction and coverage needs.
- Provide post completion claims support.