Warranty & Indemnity Insurance

Sell-side or buy-side W&I insurance?

W&I insurance policies can be purchased and introduced either by the seller (sell-side policy) or the buyer (buy-side policy). In most instances, W&I insurance is purchased by the buyer.

The question of who pays for the policy will usually be the subject of negotiation between the parties. The policy will normally become effective from completion of the business sale although, it is generally possible to arrange a policy even if signing or completion have already occurred.


A sell-side policy covers claims from the buyer for a breach of warranty, including the tax warranties or the tax indemnity.

The buyer asserts its claims against the seller, then the seller seeks indemnification from the insurer.

The policy offers liability protection to the seller and any guarantor or other warrantors depending on the agreement, for innocent misrepresentations. Seller fraud cannot be insured in a sell-side policy.


A buy-side policy covers the buyer against the seller’s misrepresentations.

Two key advantages of a buy-side policy over a seller-side policy are:

■ A buy-side policy provides indemnification in respect of seller fraud, although the policy is structured so that the insurer has the ability to subrogate against the seller. The insurer only has recourse against the seller if the loss resulted from fraud or wilful misconduct on their part.

■ In most cases, the seller is not involved in the claim. The buyer can claim directly against the insurer (i.e., without having to pursue recourse against the seller or warrantor(s) who provided the warranties in the agreement).

What information do we require?

■ To provide a non-binding indication:

— Deal Background Information


■ To underwrite and finalise a policy:

— Each and every draft of the Purchase Agreement

— Any Due Diligence Reports available

— Data Room access

— Expense Agreement signed by the Insured