W&I Insurance and Warranty Claims: What M&A Lawyers Need to Know
W&I Insurance Mechanics
Warranty and indemnity insurance allows the buyer to claim under an insurance policy for financial warranty breaches. The insurer pays the buyer and then pursues subrogation rights against the seller.
W&I has become market standard in UK M&A transactions above approximately £5M deal value. It has not reduced warranty claim disputes. It has changed who brings them.
Subrogation
After paying a W&I claim, the insurer acquires the buyer's rights against the seller. The insurer can pursue the seller for the amount paid, requiring proof that the warranty was indeed breached.
Forensic accountants provide expert evidence in both the initial claim against the insurer and any subsequent subrogation action against the seller.
Policy Exclusions
W&I policies typically exclude fundamental warranties (title, capacity), fraud, and matters known to the buyer at signing. The expert must address whether the claimed loss falls within covered warranty categories.
Policy limits are fixed, unlike SPA limitation periods which are negotiated. Early notification within the policy period is essential.
Instruct a Warranty Claim Expert Witness
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