A joint venture is an entity formed by two or more businesses that want to pursue a specific purpose for a specified period of time. While some states require a legal filing of the venture, other states recognize any entity that meets the definition. A partnership differs from a joint venture as the former lasts indefinitely and its purpose may change.
A joint venture can consist of sole proprietors, corporations, partnerships or any combination of these entities. Such ventures often bring together two areas of expertise into a single endeavor in order to capitalize on that combined expertise for a specified time period.
Insurance policies generally do not cover a joint venture unless the ventureís name is shown on the policy. There is no automatic coverage for a business that begins a joint venture during a policy term. For instance, two contractors are interested in bidding on a major project. They decide that it may be beneficial to bid on the project as a single entity. In this case, the joint venture is recognized as a distinct legal entity formed for pursuing the project. Unfortunately, itís equally common for businesses to fail to recognize their formation of a joint venture. The oversight could result in the joint venture suffering a loss that isnít covered by insurance.
Consider contacting an insurance agent to discuss your possible coverage needs which may include general liability, automobile liability and, if the joint venture has employees, workers compensation insurance. It is also important to determine if the joint venture will need insurance to continue after it ceases to exist. The issues are unique to each joint venture and should be carefully addressed by legal counsel and the insurance agent in cooperation with the joint venture principals.
COPYRIGHT: Insurance Publishing Plus, Inc. 2002
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