Warranty and Indemnity (W&I) insurance is a contract for a buyer or the seller to transfer risk of financial loss from a breach of the seller’s warranties and indemnities in a share or asset sale agreement.

W&I insurance is a cost-effective alternative to the traditional means of addressing transaction risks such as purchase price adjustments, escrows, hold-backs or parent company guarantees. Motivations for utilising W&I insurance include: achieving a “clean exit”; enhancing a bid in a competitive auction; to maintain harmony with management; assist in the provision of debt and to reduce credit risk.