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Commitments and Contingencies
3 Months Ended
Mar. 31, 2025
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies

8. Commitments and Contingencies

Leases

The Company leases office space under various non-cancelable operating leases. There have been no material changes to the Company’s leases during the three months ended March 31, 2025. For additional information, please read Note 12, Leases, to the consolidated financial statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2024.

Indemnification Agreements

In the normal course of business, the Company may provide indemnification of varying scope and terms to third parties and enters into commitments and guarantees (“Agreements”) under which it may be required to make payments. The duration of these Agreements varies, and in certain cases, is indefinite. Furthermore, many of these Agreements do not limit the Company’s maximum potential payment exposure.

In addition, the Company has entered into indemnification agreements with members of its board of directors and executive officers that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers.

Through March 31, 2025, the Company has not incurred any material costs as a result of such indemnification obligations. The Company does not believe that the outcome of any claims under indemnification arrangements will have a material effect on its financial position, results of operations or cash flows, and it has not accrued any liabilities related to such obligations in its consolidated financial statements as of March 31, 2025 and December 31, 2024.

Legal Proceedings and Other Contingencies

On May 15, 2024, Tim Presto, individually and in his capacity as Seller Representative of Ryan McClintock, Edward Hames and Tim Presto, the former equity owners (collectively, the “Sellers”) of Kanopy Insurance Center, LLC, One Eight Software, Inc., Parachute Insurance Services Corp., and Policy Fuel, LLC (collectively, the “Acquired Entities”), brought a civil action (the “Delaware Action”) in the Court of Chancery in the State of Delaware (the “Court”) against the Company alleging, among other things, breaches of the 2021 Equity Purchase Agreement governing the Company’s acquisition of the Sellers’ equity interests in the Acquired Entities. On May 1, 2025, the Company agreed to sell to Messrs. Presto and Hames (collectively, the “Buyers”) the right to receive commissions under the remaining property and casualty carrier contracts related to its direct to consumer agency and certain related software and obligations related to that commission stream by entering into and contemporaneously closing a Purchase and Sale Agreement (the “Purchase Agreement”) with the Buyers. Pursuant to the Purchase Agreement, the Company sold Parachute Insurance Services Corp. and One Eighty Software, Inc. (collectively, the “Parachute Companies”) to the Buyers for cash consideration of $0.5 million and entering into a settlement agreement with the Buyers and Mr. McClintock to resolve all disputes and/or claims asserted by Mr. Presto individually and in his capacity as Seller Representative for himself, Mr. Hames and Mr. McClintock and others in the parties’ litigation.

In accordance with ASC 450 Contingencies, the Company assesses the probability of realizing a material loss contingency for potential losses at each period end. Based on this assessment, the Company has recorded a legal settlement liability of $8.2 million, representing the difference between the fair value of the commissions receivables, customer contracts and developed technology sold in May 2025 to settle the litigation, and proceeds expected to be received for such assets, of which $7.9 million was recorded as legal settlement expense in the three months ended March 31, 2025.

The Company is from time to time subject to various other legal proceedings and claims, either asserted or unasserted, which arise in the ordinary course of its business. While the outcome of these claims cannot be predicted with certainty, management does not believe, based on its current knowledge, that the outcome of any of these other legal matters will have a material adverse effect on the Company’s consolidated results of operations or financial condition. Notwithstanding the foregoing, the ultimate outcome of any other legal proceedings involves judgments, estimates and inherent uncertainties, and cannot be predicted with certainty. It is possible that an adverse outcome of any matter could be material to the Company's business, financial position, results of operations or cash flows as a whole for any particular reporting period of occurrence. In addition, it is possible that a matter may prompt litigation or additional investigations or proceedings by other government agencies or private litigants.