Warranty & Indemnity
Sellers of property often want to come out of a transaction without legacy liabilities to worry about in subsequent years. Additionally, buyers of property (and their funders) may not want to rely on the security of the seller to honour warranties and indemnities detailed in a sale & purchase agreement.
Warranty & Indemnity insurance provides a tidy solution to transfer the risk of such stakeholders to the insurance market. Furthermore, the relative cost of Warranty & Indemnity insurance makes it an attractive alternative to other traditional solutions such as placing sale proceeds in escrow or using bank guarantees.
Understanding and managing the risks associated with asset acquisition and disposal is a complex matter and it is essential to have experienced and capable risk advisers.
PIB Property’s transactional risk and insurance specialists work closely with clients and their advisers to design and implement bespoke solutions to help remove barriers to a transaction completing.
Who can PIB help?
In short PIB Property can help any party involved in a transaction where there is a need to transfer some part of the risk associated with that change of ownership, including:
- Commercial enterprises, large and small
- Private equity firms
- Asset managers
- Banks and finance institutions
- Investors in infrastructure
Buy-side & sell-side?
A seller may seek out a Warranty & Indemnity insurance policy for a number of reasons including:
- The seller may want a ‘clean’ exit and not have the worry of a future claim being made against them
- The seller may not be prepared to agree to part of the proceeds (of an asset sale) being held in escrow or being settled on deferred terms
- The seller may be unwilling or unable to stand behind the warranties
Alternatively, a buyer may seek out a Warranty & Indemnity insurance policy for a number of reasons including:
- The buyer may reduce the risk of investing in jurisdictions that it is unaccustomed to
- The buyer may get comfort from the right to claim directly against an insurance policy rather than relying on the security of the seller
- The buyer can be protected against ‘seller fraud’
- The buyer’s standing may be enhanced by transferring risk away from the seller thereby removing hindrances to negotiation proceedings
- The buyer may help satisfy risk management protocols, help with investor relations or comply with a stance on corporate governance
- The buyer ability to borrow money to finance the acquisition may be enhanced
How can PIB help?
PIB Property’s Warranty & Indemnity specialists will work closely with you to clearly understand your sale and purchase agreement and develop an appropriate risk transfer strategy.
We also recognise that these deals are often urgent and always highly confidential. Promptness and prioritisation of your case, together with absolute discretion, is a given when you deal with PIB.
Get in touch
If you would like to speak with us to find out what PIB can do for you, please get in touch.