A buyer-side policy allows the buyer to recover losses from inaccuracies in the warranties and indemnities directly from AIG without first pursuing recovery from the seller.
A seller-side policy reimburses the seller for losses from warranty and indemnity claims by the buyer.
Each policy is tailored to meet the specific needs of the transaction, with coverage designed to:
- work back-to-back with the recourse and risk allocation agreed between the buyer and seller in the acquisition agreement,
- mirror the minimum claim provisions (de minimis and retention thresholds) and other limitation language in the acquisition agreement,
- match the warranty survival period under the acquisition agreement (including any extended period for tax) – extendable if required, and
- cover first and third party claims and associated defence costs. Cover on a buyer-side policy will also respond to fraud by the seller.
