CLAIRE-IFICATION

IA&B Vice President - Advocacy Claire Pantaloni, CIC, CISR Are you a member with a question? Contact Claire to find the answer at 800-998-9644, ext. 604 or ClaireP@IABforME.com.

QUESTION:

I’m buying a small book of business from an owner who will continue on his own under a different name. How can I go about using his current agency’s name?

ANSWER:

If you want to keep the goodwill associated with the agency from which you are buying the book, make sure you address use of and rights to the name with the seller. Ask the attorney who is drafting the contract to include a provision addressing ownership of the name in the purchase agreement, and to handle the procedure associated with relinquishing that name on behalf of the seller, as appropriate in your state. Once that’s taken care of, you should be able to add the name as a fictitious name * to your own agency.

How?

Whenever you add a name under which you will be doing business, you generally have to file that name as a fictitious name with:

▲ the state agency managing business registrations (Secretary of State in Pennsylvania, Department of Assessments and Taxation in Maryland, and Prothonotary’s Office in Delaware), and

▲ the insurance regulator.

More information on the process is available on the website for each of our three states at IABforME.com/ member-resources/resident-license-for-an-agency. Also, and of particular importance because the person you are buying from is staying in business for himself:

▲ You will want to check that the purchase agreement includes a non-piracy provision to protect the book of business you are buying.

▲ If your seller intends to focus on one line of business (say life insurance) and is selling his P&C book, make sure you discuss and address those customers that carry both lines. Are they part of the transaction? And if so, who owns them? Your agreement should address the ability to cross-sell, but also the ultimate ability to sell that portion of the book if you have any customers in common.

The point of the purchase agreement is to transfer ownership rights, and the extent and delineation of that ownership should be clear and unambiguous.

* A fictitious name is also known as an assumed name, “trading as” name (T/A), or “doing business as” name (DBA), since it is a business name that differs from the name that is officially registered for your business (LLC, S-Corp, C-Corp, or partnership). If you are a sole proprietor and want to use a fictitious name, you also will have to register it.

This document is not a legal opinion and should not be relied upon as such. The intent of this document is to provide a general background regarding the topic or topics discussed, not to provide legal advice. Producers and agencies should consult an attorney regarding specific situations and specific questions with respect to the topic or topics covered in this document. Neither the Insurance Agents & Brokers nor any of its employees shall be responsible for any errors or omissions regarding any statements made in this document, nor any errors or omissions regarding any statutes, regulations, court rules, and/or any other government documents cited in this document.