Glossary · Deal documents
W&I insurance
Also called warranty and indemnity insurance, representations and warranties insurance, R&W insurance, RWI
Definition
Warranty and indemnity (W&I) insurance, called representations and warranties insurance in the US, covers losses when the seller's warranties prove untrue. It lets sellers walk away with a clean exit. Insurers price the policy on the quality of the buyer's due diligence, so a well-documented data room matters.
Related terms
Representations and warranties Statements of fact the seller makes about the business in the purchase agreement, with a remedy if they prove untrue. Indemnity A promise to repay a specific loss in full, often used for known risks found in due diligence. Due diligence The investigation a buyer, investor or lender runs on a company before committing: its finances, contracts, legal position and operations. Asset purchase agreement The contract for buying selected assets and liabilities of a business, instead of its shares. Change of control clause A contract term that lets the other party end or renegotiate the contract if the company is sold. Confidential information memorandum The detailed sales document a seller's adviser sends to buyers after they sign an NDA. Disclosure letter The seller's list of known exceptions to its warranties, which limits what the buyer can later claim for. Letter of intent A mostly non-binding document that sets out the main terms of a deal before the final contract is negotiated.