Illustrative example
A buyer discovers a covered breach of a specified financial warranty after completion. The policy may contribute to the resulting insured loss.
Selected transaction risks
M&A warranty and indemnity insurance
In a business sale, not every warranty issue is visible before completion.
Warranty and indemnity insurance may cover certain financial losses from unknown breaches of specified warranties in a sale agreement. It does not replace legal, financial or tax due diligence, and known or disclosed matters are generally outside the intended scope.
Preparing the review
What information usually matters?
- Buyer, seller, target, transaction structure and enterprise value.
- Sale agreement, warranty package, disclosure process and liability cap.
- Legal, financial, tax, operational and insurance due diligence.
- Known issues, exclusions sought, policy retention and period.
- Signing, completion and insurer-review timetable.
Important boundaries
Known matters, forward-looking statements, purchase-price adjustments and uninsurable penalties may be excluded. Obtain transaction-specific legal and tax advice.