A relatively new concept in the insurance sector, transactional liability insurance is designed to reduce or extinguish the impact of liabilities which may arise from a business merger, acquisition or restructure. This important insurance coverage is designed to assist in facilitating the deal and can cater for breaches of warranties or indemnities in the SPA, any tax liabilities that may arise and other contingent liability claims.
Policies can be purchased by either the buyer or the seller – dependent upon where the liability rests in the transaction. The need often arises during sale preparations when the seller is not prepared to indemnify the buyer against an unfavourable outcome and the buyer is not prepared to take on the long-term liability.
Insurance covers include:
- Warranty & Indemnity Insurance
- Tax Liability Insurance
- Litigation Insurance
- Prospectus / IPO Liability Insurance