Other Legal Risks

Warranty & Indemnity Insurance

What is Warranty and Indemnity Insurance (also known as Mergers and Acquisitions Insurance)?

When a business is sold the vendors are required to enter into a range of obligations relating to the financial state and prior operation of the business.  The purchaser is then able to make a claim against the vendors if the statements turn out to be untrue.

Who can take out Warranty and Indemnity Insurance?

Either the vendor or the purchaser can arrange cover.  If the purchaser requires cover then a parallel ‘due diligence’ process is usually involved.

Cover is, however, quickly and readily available for the vendor enabling them to be secure in enjoying the money received for the sale of their business.  Vendor cover can frequently be effected within 2-3 business days.  Even where cover is taken out by the vendor a ‘loss payee’ clause can usually be added meaning that relevant payments can be made directly to the purchaser.  This, in turn, can often facilitate a transaction.

Product Features:

Risks covered: claims notified under the warranties and indemnities or any tax deed given by the seller together with costs and expenses.

Policies are usually subject to an exclusion of the first amount of any valid claims.

Information needed:

  • Full details of the transaction (including the nature of business and sale value)
  • Target completion date (or actual date if you are making a post-completion application for insurance)
  • Copy of the sale and purchase agreement (with confirmation as to whether draft or final)
  • Copies of all due diligence reports (draft or final)
  • Up to date financial information for the business being sold
  • Details of the ‘data room’ process together with access



To find out more about Warranty and Indemnity Insurance, or to get a quote, call our team on 0345 557 0845  or 01293 880700 or email us at enquiries@lawsureinsurance.co.uk or use the online chat at the bottom right of the page.