Warranty and Indemnity Insurance

Warranty and Indemnity Insurance

Comprehensive and tailored protection against financial loss resulting from inaccuracies in warranties and indemnities relating to an acquired company or business.

Australia has strong market conditions for people looking to sell their business. With lower regulatory hurdles than some other countries and a stable political and legal environment, Australia can also be an attractive environment for offshore investors. These factors support the current M&A activity in Australia.

As in all markets, however, there are a number of risk factors that can hinder the successful implementation of a merger, acquisition or restructure, includng potential inaccuracies in the warranties and indemnities given by a seller.

Warranty and Indemnity Insurance provides protection from the financial losses that may arise from such inaccuracies and can significantly reduce or remove transaction risk, thus facilitating the completion of the proposed transaction.

Large capacity

Highly customised coverage for all transaction values, from domestic to large multi-jurisdictional acquisitions.

Ease of reimbursements

Buyers can recover losses directly from the insurer without needing to locate and pursue a seller and its assets.

Comprehensive cover

Coverage for a complete set of warranties and indemnities made by a seller, including title, commercial and tax matters.

Exceptional claims handling

Access to our outstanding team of claims professionals who are experienced and expert in litigation relating to acquisitions, ensuring that your claim will be resolved in a professional and efficient manner.

A buyer-side policy allows the buyer to recover losses from inaccuracies in the warranties and indemnities directly from AIG without first pursuing recovery from the seller.

A seller-side policy reimburses the seller for losses from warranty and indemnity claims by the buyer.

Each policy is tailored to meet the specific needs of the transaction, with coverage designed to:

  • work back-to-back with the recourse and risk allocation agreed between the buyer and seller in the acquisition agreement,
  • mirror the minimum claim provisions (de minimis and retention thresholds) and other limitation language in the acquisition agreement,
  • match the warranty survival period under the acquisition agreement (including any extended period for tax) – extendable if required, and
  • cover first and third party claims and associated defence costs. Cover on a buyer-side policy will also respond to fraud by the seller.

  • Businesses involved in corporate acquisitions or disposals and seeking protection from financial loss resulting from inaccuracies in warranties and indemnities given by a seller as part of a transaction.
  • The named insured under a Warranty and Indemnity policy can be the seller or buyer of a business, or other interested parties, including a new company, special purpose vehicle or a guarantor.

For any enquiries about purchasing, renewing or making a claim on an AIG business policy, please contact your insurance broker or find a broker here.

The AIG Advantage

  • Bespoke products designed for M&A transactions, based on over 40 years’ experience working with Australian businesses, and over 95 years serving customers around the world.
  • Local expertise backed by a worldwide network of highly-skilled insurance professionals, helping to make complex deals a reality.
  • Financial strength and stability – large capacities available, reducing the need for multiple insurers.
  • Access to our highly-skilled and specialised team of claims professionals who will process your claim efficiently and professionally.