Have you ever been interested in expanding your business by acquiring another company? Or planning your company to be acquired by other company? If it's a yes, then there are certain things that you need to take note before signing the deal.

As a buyer, you might be worried whether the seller has declared everything in the Sale Purchase Agreement (SPA) and/or breaching the seller's warranties. If the seller is proven causing damage due to breach in warranties, the buyer is allowed to recover the indemnities via Terms and Conditions in SPA from the seller. However, there is a possibility that it is hard to claim your right due to insolvency of the seller.

On the other hand, as a seller, you need to retain significant escrow amounts for future potential liability due to SPA. Keep in mind that seller still have the exposure to post-closing disputes and potential financial losses even after signing the deal with the buyer.

With Warranty & Indemnity Insurance (W&I) is able to provide valuable protection and peace of mind for both buyers and sellers involved in mergers and acquisition transactions, helping to facilitate smoother deals and mitigate financial risks through insurance.

What is covered under W&I Buyer's Insurance?

  • Indemnify Losses due to Breach of Seller's Warranties - If seller breaches any warranties / representations made in the sale agreement regarding the company's financial condition, operation, assets, or liabilities, this insurance can indemnify buyer's losses due to those breaches.

 

What is covered under W&I Seller's Insurance?

  • Breaches of Seller's Indemnities - If seller agrees to indemnify the buyer for specific risks or liabilities (indemnities) and breaches those indemnities, the insurance can cover the seller's losses resulting from such breaches.

 

Premium Indication: Your insurance premium will vary with your Business Complexities and the Limit of Liability that you are willing to purchase. The higher the complexities and Limit will lead to a higher premium.

If you need Insurance Quotation and/or additional information regarding Warranty & Indemnity insurance, please contact PT. Mitra Iswara & Rorimpandey at jakarta@mirbrokers.com or 62-21 530588.