Warranty & Indemnity

Warranty & Indemnity (W&I) insurance is available for buyers and sellers in a M&A transaction. It can be included in the transaction as a key risk management tool giving both buyers and sellers increased confidence in the transaction. The insurance provides the policy holder with direct recourse to the insurance cover if a warranty provided in the sale process is inaccurate. A buyer-side policy provides cover to the buyer for losses sustained from inaccuracies in the warranties and indemnities provided by the seller without first pursuing recovery from the seller. A seller-side policy provides cover to the seller for losses arising from claims by the buyer that the seller has breached the warranties and indemnities it provided in the sale agreement.

As M&A activity can involve a myriad of different industries that have diverse risk profiles, the policy must be tailored to the specific transaction. It is critical that the policy structure and the wording are consistent with the terms of the sale agreement. Insurers will carefully examine the extent of the due diligence that has been conducted and may exclude specific transaction risks such as regulatory or environmental issues.

Our team is experienced in advising parties to M&A transactions about the utility of obtaining warranty W&I insurance. We also advise insurers about policy coverage and assist in managing claims under W&I policies.