During share sales it is common for the seller to provide Warranties to the buyer on a broad range of matters about the target, such as title to shares, property, employment, tax, intellectual property and other commercial matters.

Warranty and Indemnity Insurance is an insurance solution which provides protection to either the seller or the buyer against breaches of the warranties and indemnities being given by the seller.

Howden provides comprehensive insurance solutions for transaction risks. With dedicated teams in the insurance market hubs, we are a leading broker in this field.

We specialise in the private equity and real estate sectors, working with private equity houses and real estate funds across the world.

Synopsis of cover

The intention of the policy is to provide cover for:

  • unknown breaches of warranties/calls under the tax covenant
  • defence costs
  • defence costs

Exclusions vary from policy to policy, but common exclusions are:

  • forward looking warranties
  • knowledge of the Insured
  • disclosed matters
  • post closing adjustments/completion account mechanism
  • fraud of the Insured


There are two basic structures for this type of policy:

  • Seller-side policy: this is designed to protect the party who gives the warranties
  • Buyer-side policy: this is designed to protect the buyer from financial loss that may arise as a result of a breach of warranty where either the buyer is unable to or chooses not to claim under the SPA. Typically, this can be as a result of the warranty cap being too low or simply that they do not wish to pursue a claim against the seller.


Warranty and Indemnity insurance is utilised:

  • By buyers to reduce the requirements of a seller to retain liability, thereby enhancing their bid
  • By buyers concerned about the strength of the seller’s covenant
  • By buyers to enhance funding options by providing additional comfort to banks about the level
  • By buyers investing in new jurisdictions
  • By sellers to avoid claw-back on cash raised by sale proceeds
  • By sellers in auctions looking to cap their liability and offer an alternative method of recourse to bidders
  • By sellers to obtain Investment
  • By sellers disposing of non-core businesses who require the insurance to obtain committee/board signoff to the warranty recourse package


Warranty and Indemnity insurance is a niche class of the insurance market which is underwritten by a limited number of specialist insurers, who have the expertise and experience to structure and underwrite this type of insurance solution. All deals will utilize a bespoke policy wording that is negotiated for that particular transaction.

For Further Information Contact:

Gajanan Rudra

VP- Private Equity


+91-22-6655 8824