W&I Insurance (Warranty & Indemnity)
An insurance policy that covers losses arising from breaches of seller representations and warranties in the Share Purchase Agreement.
Also known as: Warranty & Indemnity insurance, Rep & warranty insurance, R&W insurance
One-line definition
W&I insurance transfers warranty breach risk from the seller to an insurer, enabling sellers to achieve a clean exit while buyers retain recourse.
Why it has grown
PE sellers demand clean exits (return capital to LPs). W&I satisfies both sides: sellers walk away clean, buyers have insurance coverage for warranty breaches.
TS link
Insurers conduct their own underwriting due diligence, which closely mirrors (and often relies upon) the FDD report. A robust FDD reduces W&I premiums.
Related terms
SPA (Share Purchase Agreement)
The definitive legal agreement governing the sale and purchase of shares in a company, including price, conditions precedent, representations, warranties, and indemnities.
Financial Due Diligence (FDD)
An independent review of a target company's historical and projected financials, conducted for a buyer or lender before completing a transaction.
Vendor Due Diligence (VDD)
A due diligence report commissioned by the seller and made available to potential buyers, designed to accelerate the sale process.