Article by Perry Yam, Mark Pedretti, Philip
Taylor, Dr. Justus Binder, Marc Fredj, Lucas d'Orgeval and
Emmanuel Vergnaud
Warranty & Indemnity Insurance
In a market where deal execution is proving challenging, one of
the ways of addressing risk and closing the divide between buyers
and sellers is insurance.
Warranty and indemnity insurance is available in private equity
and M&A transactions to cover either the buyer or seller for
losses resulting from breaches of the seller's warranties or
indemnities. This coverage can serve as a complete substitute for
or partial supplement to, other forms of financial guarantees for
the seller's warranty and indemnity obligations.
A seller policy will typically pay out the indemnity owed as a
result of a breached representation or warranty to the buyer.
Coverage purchased by the buyer can provide the same protection,
but the insurer will have a subrogation claim against the seller
for any breach. An insurer can be asked to
