When selling a business, buyers usually demand that you provide representations and warranties. When you provide the buyer with these warranties and indemnities, you are accepting responsibility for any financial loss that occurs due to misrepresentation. A warranty and indemnity policy (W&I) will help protect your business sale proceeds and provide cover for defence costs arising from the claim of an inaccurate warranty.
Alan Boswell Group can provide expertise on all aspects of commercial insurance, from the initial steps taken when setting up a new business through to any potential sale. Not only can we help with your warranty & indemnity insurance but we can also help with financial advice post-sale.
As an insurance broker we have access to a wide range of products, so we can provide you with the best solution for your business. Add to this service our outstanding in-house claims team and risk management solutions and you have your ideal insurance partner.
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A warranty is a written statement provided to the purchaser to back up claims you have made about the business during the sales process. Examples include:
Indemnities offer security for the buyer from known and specific circumstances. Examples include:
Our W&I insurance policy is designed to protect you from any claims made against you for any errors found within these warranties.
Warranty and indemnity insurance is there to protect you from the financial loss associated with claims while providing both parties with additional peace of mind.
You can read all about W&I insurance, what it is and how it can help you in our guide
Alternatively you can download a one-pager to W&I insurance here:
Warranty & indemnity insurance is not a legal requirement. But, if you are buying or selling a business having a policy in place provides peace of mind that any misrepresentations will not lead to significant financial cost. Making for a more attractive proposition.
Once you have sold a business, claims against you can be made up to six years post-sale.
If a warranty is proven to be inaccurate, even if by accident, as the seller you’ll be responsible for reimbursing the buyer for the loss they have suffered as a result. A W&I policy will help protect your business sale proceeds and provide cover for defence costs arising from the claim of an inaccurate warranty.
The obvious benefit is the removal of the financial risks associated with a claim against you. However, there are other, less obvious benefits.
Yes, warranty and indemnity insurance can be purchased by the buyer in a mergers and acquisitions deal. The advantages of doing so are:
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