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Warranty and indemnity insurance – Frequently asked questions
Financial Lines

Q:       Is warranty & indemnity (W&I) insurance intended for the sale of any company?
A:       W&I Insurance can potentially be used in the private sale of a company where the seller gives warranties to the buyer.  If the shares are sold publicly than a prospectus liability policy may be more suitable.

Q:       Will Chubb insure sellers and buyers?
A:       We can insure either the seller or the buyer (but not both parties to the same transaction because of potential conflicts of interest).

Q:       Can you insure all of the warrantors?
A:       We can insure all or some of the warrantors, whether jointly or severally liable.

Q:       Can you insure all of the warranties and indemnities?
A:       We usually insure all of the general warranties, tax warranties and the tax covenant.  We would not automatically cover specific indemnities for identified matters; these would be considered on a case by case basis.

Q:       Are W&I policies annual policies which need renewing each year?
A:       No.  They are multi-year policies, designed to match the liability period of the agreement (frequently 6 or 7 years from the date of the agreement), which cannot be cancelled by Chubb or the policyholder.

Q:       Is W&I Insurance expensive?
A:       No.  The cost is a one-off payment and you can choose the amount of insurance you purchase.  As a percentage of the transaction value, the cost is a very low amount.

Q:       Is it easy to take out the insurance and will it slow down the transaction?
A:       The process of arranging cover is straight forward and does not interfere with the transaction timetable.  We review the transaction documents in a desk-top review and discuss the transaction with our client.

Q:       Can W&I Insurance only be purchased at the time of the transaction?
A:       No.  Insurance can be purchased in the lead up to the transaction or afterwards.