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What is Warranty & Indemnity Insurance?

It is a tailored insurance product to cover breaches in representations and warranties during the process of a merger or acquisition of a business. Sellers can cover themselves to prevent sale proceeds from being tied up in escrow accounts. Buyers can ensure that warranties have real value even if the seller is unable to pay a warranty claim which arises sometime in the future.

Key Coverage:

  • Insures the full Enterprise Value (EV) (either sitting above the W&I or from the ground up) and for the insured party’s full ownership period.

  • Cover can be for either share or real estate ownership or for both.

  • Cover can be provided in deals without any real estate.

Key benefits to buyers and sellers:

  • Provides cover up to the full EV for the Fundamental Warranties.

  • Covers the insured for their entire ownership period.

  • Protects the sellers for the warranties they provide when they sell the company

What information do we need to obtain terms?

  • Deal structure (who is driving the insurance) and timing.

  • Confirmation on insured values and excess structure.

  • Whether you need a title to property (number of properties in the deal) or shares or both.

  • Any specific title or share risk to be insured?

  • Copy of the property DD.

  • Copy of the corporate DD.

  • Copy of the SPA.

What we take into consideration

  • The transaction value

  • The complexity of the transaction

  • The industry sector

  • The geographical spread of the business

  • Quality of the transaction process

  • Who the advisors are and their experience

Want to learn more? 

Contact the team at Surety Bonds and we can organize a meeting to explain further.

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