Insurance Considerations When Buying or Selling an NDIS Business

Insurance rarely gets the attention it deserves in an NDIS business sale. Everyone's focused on price, compliance, and participant continuity — and insurance gets left until the last week before settlement. That's a mistake on both sides of the table.

Here's what buyers and sellers actually need to think about.

Why Insurance Matters More in NDIS Businesses

Every registered NDIS provider must hold Public Liability and Professional Indemnity insurance to meet the NDIS Practice Standards, and proof of cover is checked during certification and verification audits. Unregistered providers face less formal oversight, but in practice, most still carry these policies to manage real operational risk.

When a business changes hands, that insurance doesn't just carry on as-is. What happens to it depends on the type of policy, how the sale is structured, and what's agreed in the contract.

What Sellers Need to Understand About Run-Off Cover

Most NDIS providers hold Professional Indemnity insurance on a "claims-made" basis. This means a policy only responds to claims made while it's active — not necessarily to incidents that happened while it was active.

That distinction matters enormously when you sell.

If a participant or family member raises a claim about care provided two years before your sale, and your PI policy has already lapsed, you could be personally exposed even though the business is no longer yours.

This is where run-off cover comes in. It extends protection for claims relating to work done before the sale, for a period after you've sold or closed the business. Most insurers offer run-off terms ranging from one to seven years.

Practical steps for sellers:

• Talk to your insurance broker before you list the business, not after settlement
• Confirm whether your policy includes any automatic run-off period
• Decide whether you need to purchase extended run-off cover for your own protection
• Keep records of your policy history — buyers and their lawyers will ask

What Buyers Should Check Before Settlement

If you're acquiring an NDIS business, insurance due diligence should sit alongside your financial and compliance checks.

Ask the seller for:

• Current certificates of currency for Public Liability and Professional Indemnity insurance
• Claims history — any past incidents, complaints, or payouts
• Confirmation of Workers' Compensation cover for any staff transferring with the business
• Details of any excess, exclusions, or conditions on existing policies

If you're buying the entity (a share sale), the existing policies may continue, but you inherit whatever claims history and risk profile come with them. If you're buying the assets only, you'll likely need to arrange your own new policies from day one of ownership — so factor setup time and cost into your settlement timeline.

Entity Sale vs Asset Sale: Why It Changes the Insurance Picture

The structure of the deal directly affects what happens to cover.

In an entity (share) sale, the legal entity and its existing insurance policies generally continue. You're stepping into the same company, with the same registration and the same insurance history, good or bad.

In an asset sale, you're acquiring the participants, staff, goodwill, and equipment, but not the legal entity itself. The seller's existing policies don't transfer to you. New cover needs to be arranged to start from settlement, with no gap in protection for participants or staff.

Either way, public liability insurance should remain active right up until the sale closes, to cover any incidents connected to pre-transfer operations.

Don't Forget Directors and Officers Cover

If the NDIS business operates through a company structure, the outgoing director(s) may also want to consider Directors & Officers (D&O) run-off cover. This protects former decision-makers against claims tied to decisions made while they were in charge — including regulatory matters with the NDIS Commission.

It's a detail that's easy to overlook in the rush to settlement, but one that can matter a great deal if a compliance issue surfaces after the sale.

A Simple Pre-Settlement Insurance Checklist

For sellers:

• Speak to your broker about run-off cover at least 1–2 months before going to market
• Gather certificates of currency and claims history documentation
• Clarify with your lawyer how insurance obligations are addressed in the sale contract

For buyers:

• Request full insurance documentation as part of due diligence
• Confirm whether existing cover continues (entity sale) or needs replacing (asset sale)
• Arrange new policies early enough to avoid any coverage gap at settlement
• Ask whether Workers' Compensation history affects premiums for transferring staff

How NDIS Business Sales Can Help

Insurance is one of those details that's easy to underestimate until it causes a problem for either party. At NDIS Business Sales, we make sure insurance considerations are addressed early in every transaction, alongside compliance, financials, and participant continuity, so nothing catches you out at settlement.

Buying or selling an NDIS business and want to make sure every detail — including insurance — is covered? Get in touch with our team today for confidential, expert guidance through the entire process.