Warranty & Indemnity Insurance
Warranty & Indemnity (W&I) Insurance provides protection against financial loss arising from breaches of warranties and/or claims under a tax covenant within a Share Purchase Agreement (SPA) during a mergers and acquisitions (M&A) transaction.
The intention is to provide coverage that mirrors the warranties and tax covenant agreed in the SPA. This enables sellers to access sale proceeds immediately and manage post-completion risk, while ensuring buyers retain the ability to recover losses from a financially secure insurer.
Negotiating warranties and their associated limitations is often one of the most complex and contentious aspects of an M&A transaction. W&I Insurance helps ease this risk allocation process and can facilitate smoother negotiations.
In practice, W&I Insurance is frequently used by:
Private equity investors seeking to protect management teams in MBO transactions
Buyers concerned about the long-term financial strength of a seller
Groups divesting non-core subsidiaries and wishing to ring-fence ongoing operations
Policies can be arranged at various stages of the transaction process and are typically placed at completion. Cover generally runs in line with the limitation periods in the SPA — commonly two to three years for non-tax warranties and up to seven years for tax warranties — although extended periods can be negotiated where required.
Artemis Insurance Brokers works closely with clients and advisers to obtain non-binding indications and structure policies aligned to the transaction terms.
Sellers seeking a clean exit and immediate reinvestment of proceeds
AT A GLANCE
Cover for breaches of warranties and tax covenants in an SPA
Protection aligned
to SPA
limitation periods
Buy-side and
sell-side policies
available
Access to
specialist transactional
insurance markets
Supports smoother
M&A
negotiations
Can facilitate a
clean exit
for sellers
Frequently Asked Questions
Professional practices face unique risks, and insurance plays a key role in protecting both financial stability and reputation.