Arrange Line Warranty For Free

So-called 'fundamental' warranties (for example, that the seller has the right and capacity to sell the shares free from all encumbrances); and.business warranties (for example, that the target company is not involved in any litigation).

Whilst either the buyer or seller can technically be insured, most W&I policies are taken out by buyers. Premiums are usually between 0.9 per cent - 1.5 per cent of the policy limit, plus insurance premium tax.

Most W&I insurance policies contain a deductible (or retention), which is a fixed amount of loss that the insured party must bear before the policy kicks in. The policy will only cover the excess of the retention (unless agreed otherwise).

Most insurers include a de minimis (i.e. small claims) amount within the policy which corresponds to the equivalent provision in the SPA.A party (typically the seller but sometimes the buyer) will be expected to bear some financial risk and therefore suffer some loss before the policy provides cover.

W&I insurance has increased in popularity in recent years.Warranty and indemnity (W&I) insurance provides cover for losses arising from a breach of a warranty and claims under a tax indemnity (and, in certain cases, other equivalent provisions) in connection with a corporate merger or acquisition (M&A) transaction.

Definition: Indemnity means making compensation payments to one party by the other for the loss occurred. Description: Indemnity is based on a mutual contract between two parties (one insured and the other insurer) where one promises the other to compensate for the loss against payment of premiums.

W&I is paid by a premium, which typically ranges from 1-3% of the policy limit. The policy limit is the maximum amount that an insurer will pay-out under that policy and is normally a percentage of the purchase price.