Buying a Print Shop: Contracts, Licenses, Bonds

After you buy a print shop, read three sets of insurance clauses first: customer contracts, the lease and your loan documents. Then check the registrations that came with the business, such as sales tax, hazardous waste and postal permits. Do not assume a printing license or bond is required, or that none is; check your state and city. This guide is for buyers of commercial printers, quick printers, wide-format shops and mailing operations.

The short answer

Read three sets of insurance clauses first: customer agreements, the building lease and the loan documents. Each can ask for endorsements, not just certificates.
Do not assume a print shop needs a printing license, or that it does not. Check your state, county and city, and the shop's general registrations.
Many print shop items are inherited records: sales tax status, hazardous waste notifications, solvent wipe records and any air district rules.
Bonds are not insurance for the shop. The surety expects to be repaid, and bonds are usually reissued when ownership changes.
A certificate of insurance is not the policy, and it does not make anyone an additional insured.

Which contracts and clauses should you read first?

Collect the documents below and pull every sentence about insurance, indemnity (a promise to cover another party's losses) and limits of liability. Customer contracts for print work, such as master service agreements, vendor agreements and purchase order terms, commonly include insurance requirements and indemnity. Limits are set customer by customer, so read each contract rather than relying on a number you hear as a norm.

Print shop documents and the insurance clauses to extract
Document	What to pull	Who to ask
Customer agreements and purchase order terms	Required limits, additional insured, waiver, data security terms, indemnity, limit of liability	Your broker, then deal counsel
Building lease	Liability limits, landlord as additional insured, waiver of subrogation, primary wording, property and business income terms, environmental clauses	Broker and the landlord
Equipment leases and liens	Who must insure each press and finishing machine, and how	The lessor or lender
Loan documents	Insurance covenants, loss payable wording, proof of coverage schedule	The lender
Franchise agreement, if any	Required coverages and transfer approval	The franchisor and counsel
Purchase agreement	Insurance and indemnity sections, who bears pre-closing liabilities	Deal counsel

In customer terms for print work, look for these clause types: who warrants rights to supplied artwork and who indemnifies for copyright claims; what proof approval releases; limits on liability for reprints; who owns and who insures supplied paper, plates and files while they sit in your shop; and data handling for mailing lists. These are clauses to look for, not a statement of what print customers usually require. An indemnity promise to a customer is covered by general liability only to the extent it fits the policy's definition of an insured contract, so ask your broker to compare each indemnity clause with that wording and with any exclusions.

Customers in regulated sectors, such as those sending financial or healthcare statements, may add data security terms, which is an expectation to test, not a rule. Our method for contracts is in how to check your customer contracts against your policies, and the common surprises are in when contracts require coverage you do not have.

What does a landlord or customer really mean by additional insured?

An additional insured is a party not automatically included who is added to a liability policy at the named insured's request. Primary and noncontributory is contract wording that sets the order in which policies respond to the same loss. A waiver of subrogation means the insurer gives up a right to recover from a party the insured has agreed not to pursue. Getting these into a policy usually takes endorsements, and wording matters. Commercial leases commonly ask for additional insured status and a waiver of subrogation, and sometimes primary and noncontributory wording. See the explainer for new owners and the library's additional insured page.

A certificate of insurance does not fix a mismatch. The standard ACORD 25 says it is issued as a matter of information only and confers no rights on the certificate holder, and that if the holder is an additional insured, the policy must have additional insured provisions or be endorsed. Check the wording printed on your own certificate.

A hypothetical example. The landlord of an industrial unit writes after closing. The shop's certificate does not show an additional insured endorsement or primary and noncontributory wording, the lease asks for $1 million per occurrence, and the letter also asks how solvent and fountain solution storage is handled under the lease's environmental clause. The broker checks the forms schedule: the policy has the limit but no blanket additional insured endorsement for landlords, and the pollution exclusion may leave the storage question unaddressed. The fix for the first is an endorsement from the carrier, which is not bound until the carrier agrees. The figures and facts are invented, and your lease controls. See certificates for a landlord and lease insurance requirements.

What do lenders require, and what don't they?

For a Small Business Administration (SBA) 7(a) loan, Standard Operating Procedure (SOP) 50 10 8.1 sets the floor on the property side:

Hazard insurance is generally required on pledged collateral for loans over $50,000, with narrow exceptions for some smaller loans and for SBA Express.
Presses and other equipment are personal property collateral, insured at full replacement cost (or maximum insurable value).
The policy needs a lender's loss payable clause, which protects the lender against the owner's acts, and at least 10 days' written notice of cancellation. A plain loss payee listing does not give that protection.
The SOP does not set a general liability limit or require the lender to be an additional insured. Lenders may ask for more, and equipment lessors set their own terms.

A lender typically wants evidence of property insurance and a liability certificate, but the protection itself comes from the policy endorsement. Ask the lender for its collateral schedule and match it machine by machine to the property schedule. A leased press or wide-format printer is typically subject to the lessor's own insurance terms, so read the equipment lease for them. Read the core stack guide for policy values, SBA lender insurance requirements and evidence of property insurance for lenders.

Which licenses, permits and registrations touch a print shop?

These examples use California and Pennsylvania rules to show how much the rules differ. Yours will differ too, so use the right column as your to-do list.

Registrations to verify at a print shop sale
Item	How it generally works	What to verify
Sales tax or seller's permit	California example: the permit stays with the person in business, and a buyer may have to withhold price for unpaid tax. Other states differ	Whether you need a new permit and how successor tax rules work in your state. Do not assume a permit transfers or does not. Ask your accountant and deal counsel
Hazardous waste status	Federal rules sort generators by monthly quantity, and small and large generators need an Environmental Protection Agency (EPA) ID number. States can be stricter	What the seller registered, and whether a new notification is needed
Solvent wipe records	A federal exclusion for laundered wipes requires labeled closed containers, 180 days at most, and records kept on site. Some states differ	The seller's wipe records and the laundry's details
Air district rules	One California district limits the volatile organic compound (VOC) content of graphic arts materials and fountain solution. Pennsylvania's rule covers only rotogravure and flexographic presses above set emission levels	Your local air agency's graphic arts and permit rules
Postal permits	A shop mailing for customers can use a permit imprint, and the permit imprint section of the Domestic Mail Manual lists no bond requirement. Postage is paid at mailing.	Which permits the seller held and how postage funds are handled
Local business license, zoning, occupancy, fire inspection	These vary by city and county	Call your city clerk, zoning office and fire marshal before closing

For a general method, see licenses, permits and registrations when buying a business. Do not assume insurance pays environmental fines either; ask the carrier.

Are there bonds, and do they transfer?

Do not assume a bond comes with the business. Sales tax security bonds, lender-required bonds or customer-required bonds (for example on government work) may exist, so ask the seller and the lender what the shop actually holds. A bond is not insurance for the shop: the principal buys it from a surety to protect the obligee, and if the surety pays, it can recover from the principal and often its owners through an indemnity agreement. Underwriting relies on the principal's finances, so a change of ownership usually means the bond is re-underwritten or reissued, and the new owner typically signs a new indemnity agreement. The seller's personal indemnity to its surety generally survives the sale, and a replacement bond in your name does not release bonds already written, so ask the surety and counsel how existing bonds will be handled. See do surety and license bonds transfer, the library's surety bond versus liability insurance page and surety bonds.

What should you reissue or confirm at closing?

Ask the broker for a list of certificates the seller issued, and reissue them under your named insured. See certificates the seller issued.
Get the endorsement schedule for additional insured, waiver and primary wording and match it to the lease and top customer contracts.
Confirm the lender's loss payable endorsement is on the policy, not just on a certificate.
Ask for the seller's hazardous waste, wipe and air agency records, and the solvent and fountain solution purchase history.
Ask your accountant and counsel about sales tax status and successor rules in your state.
Ask any franchisor about transfer approval and its insurance minimums.

A request for a certificate or an endorsement is not coverage until the carrier issues it. For the core policies, read insurance after you buy a print shop and coverage gaps. Morrow can review the contracts and inherited policies, flag gaps and request quotes, and carriers decide terms.

Keep reading

Frequently asked questions

Does a print shop need a printing license?

Do not assume either way, because it depends on your state and city. Sales tax registration, hazardous waste status, postal permits and local business, zoning and fire rules can apply whether or not a printing license exists. Check with your state and local offices.

Do I need additional insured status for my landlord?

Only if your lease or a customer contract asks for it, and many do. It usually takes an endorsement on the liability policy, and a certificate alone does not grant it. Check the lease text and the endorsement schedule.

Does the seller's sales tax permit transfer to me?

Rules vary by state. In California, for example, a seller's permit is held by the person in business and must be surrendered when they stop. Ask your accountant and counsel what applies in your state.

Do surety bonds transfer when I buy a print shop?

Usually they are re-underwritten or reissued, because the surety looks to the new owner's finances and a new indemnity agreement. Ask what bonds the shop actually holds.

My landlord says my certificate is not enough. What now?

Ask the landlord which lease clause is not met, then have your broker compare the policy's endorsement schedule with it. A certificate is information only. A missing additional insured or waiver endorsement usually has to be added by the carrier, and it is not in force until the carrier issues it.

References

Just bought a business? Get your insurance reviewed.

Send Morrow the declarations pages, loss runs and key contracts you inherited. Morrow can review them against the business you bought, flag gaps and request quotes where it makes sense. Any new terms depend on carrier underwriting.

Request a review Check a contract

Morrow · 25 New Chardon Street, 4th Floor, Boston, MA 02114

This article is general information, not legal, tax or financial advice, and not a coverage determination. Coverage depends on the actual policy wording, carrier underwriting, your purchase agreement and your contracts. Ask your attorney and accountant about deal and legal questions.

Print Shop Contracts, Licenses and Bonds: What to Check After You Buy