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Warranty and indemnity insurance – Frequently asked questions
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
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.