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The process of selling or buying a business can be stressful for both the purchaser and vendor alike. Doubts on the part of the purchaser about the vendor’s ability to fulfil warranties, indemnities and covenants contained within the Sale & Purchase agreement and provide appropriate compensation in the event of misrepresentation may be a major factor in finalising a deal. Equally, the potential liabilities imposed upon the vendor by contractual warranties and indemnities they have given may be beyond the levels they are willing to accept.
Warranties & Indemnities Insurance therefore can play an important role in protecting a vendor’s position and giving confidence to purchasers. It also ensures that valuable funds tied up in Escrow accounts can be released.
Contractual warranties and indemnities will normally be affected for a specified time period and the Warranties and Indemnities Insurance will be issued with a coinciding policy period of insurance.
In certain circumstances it may be possible to insure very specific warranties given, such as Tax Bonds. In all cases however the underwriting process will involve the insurer’s undertaking their own due diligence process.
Warranties and Indemnities insurance is a very specialised field provided by a very small number of market leading insurers. Premiums involved can be significant.
Cover can be arranged on behalf of the vendor, the purchaser or a combination of both. Towergate Risk Solutions Hertfordshire are experienced in this specialist class of insurance and we will be pleased to provide further information and assistance upon request.
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