For many years there was no debate that a corporation that succeeds to another’s liabilities also acquires rights to the predecessor’s insurance coverage for pre-acquisition operations. Yet the insurance industry repeatedly has attempted to argue—and force policyholders to litigate—that those corporate successors lose their insurance. Courts have rejected this extreme anti-coverage argument repeatedly. This past April, the South Carolina Supreme Court handed insurance companies their latest loss.

The recent policyholder victory in South Carolina shows that, even in 2022, the insurance industry is still pushing its improper arguments seeking to eliminate coverage of corporate successors. In addition, the history shows an understanding among insurance industry professionals that after an occurrence has taken place, the rights to coverage are freely transferrable. The overwhelming case law, recent as well as stretching back many decades, supports that historical understanding. Finally, the all-but-unbroken case record finding coverage for successors raises a question: Does an insurance company pursuing this argument in 2022 do so in bad faith?

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