Navigating W&I Insurance Exclusions

W&I insurance policy exclusions and market trends.

A warranty and indemnity (W&I) insurance policy will cover the warranties and the tax indemnity given by the sellers to the buyer under an acquisition agreement. Policy exclusions scale back coverage, bringing it in line with the scope of coverage that W&I insurance is designed to provide and such that any known deal specific matters that arise during due diligence or any matters that are otherwise outside of insurer appetite are placed outside of cover. This article considers W&I policy exclusions and their employment in the current market and touches on how to approach exclusion limitation. W&I policy exclusions fall into three categories: (i) general exclusions, (ii) deal specific exclusions and (iii) warranty amendments.