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Warranty and Indemnity Insurance Claims

The English courts have recently experienced an increase in disputes over alleged breaches of warranties and indemnities in share purchase agreements (SPAs), and the scope of cover under warranty and indemnity (W&I) insurance policies.

The recent English Court of Appeal decision in Project Angel Bidco Ltd (In Administration) v Axis Managing Agency & Ors[1] illustrates the issues that an insured party may encounter when trying to establish cover and recover loss under W&I insurance. In this case, issues arose in circumstances where there were certain inconsistencies within the terms of the policy documents themselves.

In this case, the insured party had taken out a buy-side W&I policy (the Policy) in connection with an acquisition it made as purchaser under an SPA. The insured party alleged breaches of certain warranties given by the sellers under the terms of the SPA regarding the target company’s compliance with anti-bribery and anti-corruption legislation. They then sought to recover losses from the underwriters under the Policy arising from these breaches. The Policy underwriters argued that liability arising from a breach of these warranties was excluded under the Policy, meaning that losses arising from any such breach were not recoverable under the Policy.


The Policy, as is frequently the case, included a ‘cover spreadsheet’ with a conclusive list of the insured obligations. This spreadsheet recorded the warranties within the SPA as being either “covered” or “partially covered” by the underwriters. It included the warranties that were alleged by the insured party to have been breached. The Policy also contained a number of ‘exclusions’ in favour of the underwriters, which excluded any liabilities of the underwriters arising from actual or alleged breaches of anti-bribery and anti-corruption law. This was defined as “ABC Liability”. The insured alleged there was an inconsistency between the scope of the cover in the ‘cover spreadsheet’ and the exclusion clauses. The Policy underwriters relied on the exclusion in the court proceedings brought by the insured party.


The insured party accepted that the liability for the alleged breaches of warranty fell within the exclusion but claimed that the “ABC Liability” definition contained a clear drafting error. It was argued on behalf of the insured party that the “ABC Liability” definition should have been drafted so that liability was excluded for "any liability for actual or alleged non-compliance" (emphasis added). This would have the effect of reducing the scope of the exclusion that the underwriters were relying on. However, the “ABC Liability” definition, being widely drafted, excluded liability for any "diminution in share value attributable to an allegation of non-compliance with anti-bribery laws even if the allegation was never proven nor even investigated". The insured sought a correction from the Court, on the basis that, unless this correction was made, all of the alleged breaches of the anti-bribery and anti-corruption law warranties would fall within the scope of the exclusion for “ABC Liability”. This would bring an end to its claim.

The Court had to decide whether there was a clear, obvious error in the Policy wording. It also needed to determine if there was an equally obvious remedy for such an error within the Policy that could be imposed by the Court.


The Court held that the loss could not be recovered by the insured by virtue of the relevant exclusion in the Policy. This decision was made despite the fact that the corresponding warranties were marked as “covered” or “partially covered” in the cover spreadsheet. The Court’s view was that an ordinary insured party would have no difficulty understanding that, for such an exclusion to apply, obligations must first be covered. It also highlighted the fact that the cover spreadsheet was clearly made subject to the exclusion clause in the main body of the Policy. In that regard, the Court was satisfied that there was not an obvious error in the Policy wording. In addition, the Court found that there was an unequivocal and coherent explanation for why the “ABC Liability” definition took the form that it did. It was clearly in the interests of the Policy underwriters to be drafted in this way.

The Court also noted that the exclusion in question did not render all of the anti-bribery and anti-corruption law warranties redundant. It was clear that breaches of some of these warranties (the subject of the claim) could give rise to liability under the Policy as they could theoretically fall outside the scope of the exclusion.


Recent cases have demonstrated that the English courts will avoid rewriting contractual terms simply because one party subsequently decides that it is unhappy with the bargain it has struck. The decision in Project Angel, albeit a judgment of the English courts, illustrates the reluctance of a court to alter contractual terms to what it considers to be better terms in their place. It also demonstrates the high bar that must be met to establish a genuine, obvious error in drafting, and an equally obvious cure.

The use of W&I insurance in corporate transactions is well established in the Irish M&A market. This case serves as an important reminder to those looking to incept W&I policies that contractual terms should be carefully drafted, closely analysed and the extent of cover and any exclusions clearly understood. Care should be taken to ensure that there are no inconsistencies between the insuring clause or cover spreadsheet of a policy and any exclusion clause.

For expert advice on W&I insurance in corporate transactions, contact a member of our Corporate team.

People also ask

Are buy or sell side W&I policies more common?

Buy side policies are more common. They offer buyers protection in the event of a breach of warranties and indemnities given by a seller in underlying acquisition documents.

Have W&I insurance claims come before the Irish Courts?

To date there have been no reported cases in Ireland. However, the decisions of the English courts are persuasive in Irish courts. It may well be that the Irish courts follow the decisions of the English courts in recent cases such as Project Angel.

What is the premium for W&I insurance in the Irish market?

The premium associated with a W&I insurance policy is typically calculated as a percentage of the total limit of insurance cover provided. Premiums for W&I insurance will depend on many factors, such as the nature or sector of the business being insured and the insurance market at the time. Itcan typically be anywhere between 0.5% and 1.8% of the insured limit purchased.

The content of this article is provided for information purposes only and does not constitute legal or other advice.

[1] [2023] EWHC 2649, [2024] EWCA Civ 446.

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