What is Transaction Liability insurance and
what does it cover?
Transaction liability insurance (W&I) covers the risk of a target company’s seller breaching representations
and warranties in the applicable sales purchase agreement (SPA).
Elmore Transaction Liability USP’s
Thinking outside the box
Delivering pioneering results
Operational Risk Experts to
ensure control frameworks in place
Claism arising from Transaction Risk Insurance
The top cause for warranties to be breached relate to financial statements, compliance with laws and material contracts, which is consistent with warranty claims historically
There are 4 different types of Transaction Liability
policy which a business can purchase:
Protects against liabilities arising from a breach of the representations and warranties set out in a Sales Purchase Agreement (SPA).
Protects against losses arising from missing deeds or enforcement by local authorities where work lacked requisite consents.
Protects against tax liabilities or breach of tax covenants which might crystallise post completion of a transaction.
Protects against pollution clean-up obligations and third party liabilities from a seller’s real estate interests and historic operations.
There are additional areas of coverage available in a PI insurance policy, not included as standard which Insurers will charge an additional premium for. Elmore recommends the following covers are included when seeking quotations:
Given directly from insurer to insured under the policy if the seller does not give a indemnity.
US Style Policy Enhancements
EU Insurers are now offering wide coverage offerings providing more all-risk type policy coverage..
New Breach Cover
This covers breaches that both occur and are discovered or disclosed in the interim period between signing and closing
M&A Insurance Due Diligence
To optimise the potential for success of any acquired business, the financial parties should satisfy themselves that it will have access to adequate and appropriate protection against liabilities that might accrue after completion of the transaction.
If the past, present and future insurance protection for targeted companies are not adequate or appropriate, investments will be exposed to unnecessary levels of risk.
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We take cyber security seriously and are one of the few in the insurance industry to certify with Cyber Essentials.
Implementation of Cyber Essentials controls can significantly reduce the risk of prevalent but unskilled cyberattack.