W&I insurance serves to cover losses resulting from unknown breaches of warranties and indemnities given by the seller to the purchaser in a purchase agreement.

The insurance policy “steps into the shoes” of the seller and covers such losses subject to the terms and conditions of the policy. The insured (most often the buyer) benefits from the fact that losses can be recovered directly vis-à-vis the insurer, so that there is no need to involve the seller in a claims settling process.

The coverage may benefit both the buyer and the seller in helping to overcome obstacles to negotiating the Transaction.