Warranty and Indemnity Insurance
Specialist warranty and indemnity insurance designed to facilitate smooth mergers and acquisitions transactions.
Business Insurance |
Transactional Risks Insurance | Warranty and Indemnity Insurance
Specialist warranty and indemnity cover arranged for buyers and sellers in M&A transactions
At Jensten, our specialist team understands M&A transactions and the critical role that warranty and indemnity insurance plays in bringing deals to successful closure. We can arrange a wide range of cover through our carefully selected panel of specialist insurers, providing the protection and peace of mind that allows transactions to proceed with confidence.
The value of warranty and indemnity insurance extends far beyond simple risk transfer. For sellers, it can mean the difference between achieving a clean exit and facing years of potential liability. For buyers, it helps to provide protection against unknown risks while preserving working capital and maintaining deal momentum.
Our extensive experience across professional services, financial services, and commercial enterprises means we understand the sector-specific risks that can impact your transaction. From regulatory compliance issues to undisclosed professional liabilities, we work closely with legal advisers and corporate finance teams to help ensure a wide range of protection that aligns with your transaction objectives.
Trusted Advisor
Every Step Of The Way
What does Warranty and Indemnity Insurance cover?
We arrange warranty and indemnity insurance that helps provide recommended protection against financial losses arising from breaches of warranties and representations in sale and purchase agreements.
Tax liabilities
Tax Liabilities represent a significant area of cover, protecting against historical tax issues, including undisclosed HMRC investigations, incorrect tax treatments, PAYE and VAT irregularities, and transfer pricing disputes. These matters can surface years after completion, making the extended cover period particularly valuable for both buyers and sellers.
Financial misrepresentations
Financial misrepresentations are covered, including inaccuracies in accounts, undisclosed debts, working capital adjustments, and revenue recognition issues. The insurance we arrange can respond to losses arising from differences between the warranted financial position and the actual position discovered post-completion.
Employment and pension liabilities
Employment and pension liabilities form another crucial protection area. Cover can include historical employment tribunal claims, pension scheme deficits, and wrongful dismissal matters. With employment legislation constantly evolving, this cover helps tp provide recommended protection against legacy issues that weren’t apparent during the transaction.
Regulatory compliance and litigation
Regulatory compliance and litigation matters are increasingly important considerations. The policies we arrange can cover undisclosed regulatory breaches, ongoing investigations by sector regulators, pre-completion disputes, and contractual claims. For businesses operating in regulated sectors such as financial services or healthcare, this cover helps to provide critical protection against compliance failures that predate the transaction.
Intellectual property issues
Intellectual property issues, including ownership disputes, infringement claims, and licensing irregularities, can significantly impact business value post-acquisition. The insurance helps to provide protection where third-party claims emerge relating to pre-completion activities.
Material contracts cover
Material contracts cover helps protect against issues with key customer or supplier agreements, including undisclosed breach of contract, change of control provisions that weren’t properly identified, and disputes relating to contractual obligations that existed at completion.
The structure of cover can be tailored to your specific transaction needs, with buyer-side policies protecting purchasers directly and seller-side policies enabling clean exits whilst maintaining buyer protection through insurance rather than escrow arrangements.
Why do businesses need Warranty and Indemnity Insurance?
The modern M&A landscape presents unprecedented complexity, with heightened regulatory scrutiny, evolving legislation, and increasingly sophisticated due diligence processes. Despite these advances, it remains impossible to identify every potential liability during the transaction process, creating ongoing exposure for both parties.
For sellers, warranty and indemnity insurance offers the opportunity to achieve a clean exit whilst providing enhanced buyer protection. Rather than retaining substantial funds in escrow or maintaining extensive warranty provisions, sellers can transfer risk to insurers, enabling them to access full consideration at completion and move forward with confidence.
Buyers benefit from enhanced protection that extends beyond the seller’s covenant strength and duration. Insurance provides cover for the full policy period without the risk of seller insolvency or disputes over warranty fund access.
The insurance also facilitates deal execution by reducing negotiation time around warranty schedules and liability caps. With insurance in place, parties can focus on commercial terms rather than extensive risk allocation discussions, often resulting in faster completion and reduced transaction costs.
Parties to a Performance Bond.
A performance bond is an agreement between three parties, as explained below.
- The principal (usually a contractor), is the person or company who is providing a service.
- The obligee is the party that is paying the principal to perform certain work.
- The surety is the party that provides a performance bond to guarantee that the principal will complete their work. In the event of a partial or total failure by the principal. the surety will pay any additional costs for completion, up to the limits of the performance bond.
Our Team Of
Transactional Risks Specialists
Questions?
Ready to protect your scale-up with insurance that matches your ambition? Contact us today to start a conversation. Let’s build a insurance roadmap that powers your growth and reflects your values.
What Our Clients Say...
Transactional Risks News & Insights
Warranty & Indemnity Insurance FAQs
Buyer-side policies protect purchasers against losses arising from warranty breaches, with the buyer paying the premium and making any claims directly to insurers. Seller-side policies enable sellers to transfer their warranty liability to insurers, with sellers typically paying the premium but buyers benefiting from enhanced protection through insurance rather than relying solely on seller covenant. The choice between structures often depends on deal dynamics, tax considerations, and party preferences.
Standard exclusions include known risks identified during due diligence, forward-looking matters such as future trading performance, and certain specific risks such as pension scheme deficits (unless specifically covered). The key is ensuring that exclusions are carefully negotiated to align with deal-specific circumstances and risk allocation agreements between transaction parties.
The process typically requires 3-4 weeks from initial approach to policy issuance, though this can be compressed for urgent transactions with sufficient resource allocation. Early engagement with insurers is advisable to ensure adequate time for due diligence review and policy negotiation without delaying transaction completion.