Buyer's Warranty & Indemnity Policy
What is Buyer's Warranty & Indemnity Policy ?
A Buyer’s Warranty & Indemnity (W&I) insurance policy is a type of insurance that protects a buyer in a merger or acquisition transaction against financial losses arising from breaches of warranties and indemnities given by the seller in the sale and purchase agreement (SPA). It’s a strategic tool used to manage risks associated with unknown or undisclosed matters affecting the target company.
Key Features and Benefits
Key Features policy covers:
- Mitigates Risk
- Clean Exit for Sellers
- Deal Certainty
- Replaces Holdbacks/Escrows
- Buyer’s Perspective
- Seller’s Perspective
- Underwriting Process
Common Claims:
- Breach of Warranty:Financial losses arising from a breach of warranties related to financial statements, taxes, HR matters, or litigation, among others.
- Damages and Settlements:Covering damages awarded against a warrantor for breach of warranty, sums payable under an indemnity, or settlements.
How it Works
works
- Policy Scope
- Back-to-Back Cover
- Claims Made Basis
- Potential Exclusions
What is the indemnity policy for a buyer?
An indemnity insurance policy covers a legal defect with the property that either can’t be resolved or would be very costly and/or time consuming to do so. So, instead of trying to fix the problem, you simply take out the insurance to protect you against an expensive bill in the future.
What does indemnity insurance cover you for?
Professional indemnity insurance protects you against claims for loss or damage made by clients or third parties as a result of the impact of negligent services you provided or negligent advice you offered. Compensation claims can be brought against you even if you provided a service or offered advice for free.
What is not covered under insurance?
Only civil liability claims are covered. Any liability arising out of any criminal act or act committed in violation of any law or ordinance is not covered.
