What must be done to obtain automatic coverage for a Newly Acquired Organization?

• A. Notice to the insurer; coverage is automatic for a limited period, subject to policy limits
• B. It requires immediate endorsements with full premium
• C. It voids existing coverage
• D. It applies only to affiliates within the same corporate group

Answer: (A)

Automatic coverage for a newly acquired organization is provided to prevent gaps in liability protection during a transition. The key idea is that once you notify the insurer about the acquisition, the policy automatically covers the newly acquired entity for a limited period, up to the policy limits. This gives you immediate protection while you handle formal arrangements or endorsements to extend or adjust coverage if needed.

Notice to the insurer is essential because without informing them, the automatic window might not apply. The coverage is not indefinite; it’s a temporary bridge that ends once the period expires or once a formal endorsement is put in place to continue or expand coverage. This concept does not require immediate endorsements with full premium, does not void existing coverage, and it isn’t limited only to affiliates within the same corporate group.