Buy-Side Warranty And Indemnity Insurance – Increased Coverage Gaps

As warranty and indemnity insurance continues to offer bespoke policies in an ever competitive market, we consider the key considerations for buyers at the outset of a transaction and the common gaps in coverage.

Background

The popularity of warranty and indemnity insurance has continued to expand in M&A transactions across Europe, the United States and, most recently, Asia. In summary, warranty and indemnity insurance offers coverage for losses arising from warranty and indemnity claims under a sale and purchase agreement / tax deed of indemnity and can be in the form of either a buy- or sell-side policy:

• Sell-Side – The seller is the insured party and the buyer will claim directly against the seller for any losses. The seller will recover insured losses from the insurer, who may control any defence or settlement of such claim.