W&I Insurance in Dutch M&A Compared with US R&W Insurance

How US buyers and deal counsel should integrate transaction insurance into a Dutch acquisition

The terminology changes across the Atlantic. European deal teams usually refer to warranty and indemnity insurance, or W&I. US practitioners generally use representations and warranties insurance, or R&W insurance.

For a US buyer of a Dutch company, the more useful question is how the policy interacts with the Dutch SPA, disclosure process and due diligence.

I prefer to address that early. The insurer’s underwriting will depend on the scope and quality of buyer diligence, the warranty package and the issues identified during the process. Waiting until the SPA is almost agreed can leave gaps that are difficult to solve without reopening diligence or transaction terms.

Buyer-side policies dominate current Dutch and wider European practice. They allow the buyer to claim directly against the insurer while substantially reducing the seller’s post-closing exposure. That structure is particularly common in sponsor exits and has also become established in corporate M&A.

This article forms part of my Dutch M&A Compared: Dutch Deal Practice in a US and UK Context series.

Put insurance on the deal timetable before underwriting starts

A W&I process relies on the work already being done by the transaction team.

The insurer will review the SPA, warranty package, disclosure materials and buyer’s due diligence. Areas that have not been adequately diligenced may receive less favourable treatment in the policy or be excluded from cover.

That is why I want to know early whether the transaction is expected to be insured.

It affects how the Dutch legal due diligence is scoped and reported.

If the warranty package contains detailed IP, employment, tax, regulatory or material contract warranties, the underwriting team will expect the relevant risks to have been investigated. A generic legal DD report that does not address a material warranty area can create a coverage discussion at precisely the moment the deal team is trying to sign.

Aon similarly notes that insurers base their underwriting on the due diligence carried out in the transaction and recommends bringing W&I into the process early.

For international lead counsel, I can usually adapt the Dutch workstream to the existing global diligence process rather than create a separate insurance exercise.

The SPA and the policy need to be read together

An insured SPA still matters. The seller gives the contractual warranties. The insurance policy determines which breaches and losses are covered by the insurer, subject to the terms of the policy.

Those two documents need to align. I would compare at least:

• the insured warranties;
• policy exclusions;
• definitions of loss;
• knowledge provisions;
• disclosure;
• de minimis and retention mechanics;
• claim periods;
• seller liability; and
• fraud and subrogation provisions.

A warranty can exist in the SPA and still fall outside insurance cover. The reverse drafting problem also occurs. The parties may negotiate a broad insurance solution while the SPA contains narrower warranties or limitations that reduce the buyer’s underlying contractual protection.

The policy process should therefore run alongside the SPA process. That becomes particularly important when a US buyer uses its own precedent. US R&W expectations around loss, materiality, disclosure and claim mechanics may not map automatically onto the proposed European policy.

Seller liability can be close to zero in an insured sponsor exit

W&I changes the seller-recourse discussion significantly.

In a typical insured Dutch PE exit, the buyer may have first and exclusive recourse against the insurer for business warranty claims. Current Dutch PE market practice describes seller liability in such structures as often being reduced to a nominal amount, sometimes EUR 1, subject to negotiated exceptions.

That clean-exit structure is one of the main reasons W&I is attractive to PE sellers.

The exceptions deserve attention.

Fundamental warranties may retain some direct seller liability. Fraud is normally treated separately. Known risks may be dealt with through specific indemnities or another mechanism because they fall outside ordinary W&I cover.

I therefore do not describe an insured deal simply as “zero seller recourse”.

The SPA, policy and any specific indemnities need to show exactly where the buyer can recover.

For international lead counsel, that recovery map is useful before the liability article is finalized: insurer for covered warranty breach, seller for agreed residual matters, and separate treatment for known risks.

Disclosure under the SPA and disclosure under the policy are not always the same

This is a particularly relevant point in Dutch-US transactions.

As discussed in Dutch Warranty and Disclosure Practice Compared with US Deals, Dutch SPAs may treat the entire data room as generally disclosed against the warranties.

The insurance policy can take a different approach.

In transatlantic deals, insurers have offered so-called data-room scrapes, under which general disclosure of the data room for purposes of the SPA does not automatically reduce policy coverage in the same way. Aon has identified this as one of the features used to give US acquirers of EMEA assets a more familiar R&W-style protection package.

That is commercially important.

Suppose the seller obtains broad protection under the SPA because the full data room is deemed disclosed. The buyer may still seek insurance cover unless the relevant issue was actually known or otherwise excluded under the policy.

The drafting needs to distinguish those positions accurately.

I would therefore review the disclosure letter, data-room definition, no-claims declaration and policy treatment together rather than assume that “disclosed” has one meaning across every transaction document.

Known risks need their own solution

W&I is principally designed to protect against covered warranty breaches relating to unknown risks.

Once diligence identifies a specific problem, ordinary warranty cover may no longer be available for that issue.

That does not make the problem an insurance problem that the broker can necessarily solve.

Take an identified tax exposure, pending customer dispute or incomplete IP ownership chain. Depending on the issue, the deal team may need a specific indemnity, remediation before closing, purchase-price adjustment, escrow, tax insurance or another specific-risk solution.

In some cases insurers can provide affirmative or separate cover. That needs to be agreed specifically.

For the SPA team, I want every material known risk to have a clear destination before signing.

This is one reason the distinction between disclosure and indemnity matters so much in insured deals. Disclosure may remove an issue from the general warranty claim route without giving the buyer economic protection for the underlying exposure.

See also Indemnities in Dutch M&A Transactions.

Retention and exclusions deserve more attention than the headline policy limit

Deal teams often focus first on the amount of insurance cover.

I also look closely at the point where coverage starts.

The buyer may bear a retention before the insurer pays. That amount can interact with the SPA basket, although the two do not always operate identically.

The policy will also contain exclusions.

Some are transaction-specific and follow from underwriting. Others reflect risks insurers are unwilling to cover on the particular deal. Known issues are an obvious example. Depending on the target and diligence, areas such as environmental contamination, pension exposure, cyber risks or specific tax matters may require separate analysis or tailored cover.

A large policy limit is much less useful if the risk that concerns the investment committee sits outside the covered warranty package.

I therefore prefer to read the exclusions against the DD red-flag list rather than as a stand-alone insurance schedule.

Claims are part of the product

W&I is sometimes presented mainly as a tool for getting a transaction signed.

The claims data shows that it also functions as an actual recovery mechanism.

Aon’s 2025 EMEA claims study reported a 26% year-on-year increase in claim notifications during 2024. Tax was the most frequently notified breach category, followed by financial statements, litigation, compliance, disclosure of information and material contracts. Financial statement breaches accounted for the largest share of reported loss in the EMEA data.

For drafting purposes, that reinforces a fairly practical point.

The buyer should be able to establish from the SPA and policy what it must prove, when notice must be given and how loss will be calculated.

A policy does not remove the need for good warranty drafting, a clear disclosure record and a disciplined claims procedure.

If a material warranty claim arises after closing, those documents will be read together.

Practical conclusion

For a Dutch acquisition using W&I, I would integrate the insurance workstream with legal due diligence and SPA drafting from the outset.

Lead counsel should know which warranties will be insured, which diligence the underwriter expects, how general data-room disclosure affects the policy, what seller recourse remains and where known risks are allocated.

The final recovery position should be visible across the SPA, disclosure letter, W&I policy and any specific indemnities.

That allows a US buyer to use a familiar transaction-insurance strategy without assuming that the Dutch SPA and European policy operate exactly like a domestic US R&W deal.

FAQ

Is W&I insurance the same as US R&W insurance?

They perform broadly the same transaction-insurance function. Policy wording, disclosure treatment, underwriting and the underlying transaction documents can differ, particularly between US and European deals.

Who normally buys the W&I policy in a Dutch M&A transaction?

Buyer-side policies are now the most common structure. The buyer claims directly against the insurer for covered warranty breaches.

Does W&I insurance eliminate all seller liability?

No. In PE exits, ordinary business warranty liability may be reduced to nominal levels, but the SPA may preserve seller liability for fraud, certain fundamental warranties, specific indemnities or other agreed matters.

Does a disclosed risk remain insured?

Not necessarily. Known risks identified during diligence are commonly excluded from ordinary W&I cover unless specific or affirmative coverage is agreed.

Does general data-room disclosure under the SPA automatically exclude insurance coverage?

Not always. The policy can apply a different disclosure standard, including arrangements such as a data-room scrape. The SPA and policy should be reviewed together.

When should W&I underwriting start?

Early enough that the expected insurance coverage can influence diligence scope and SPA drafting. Starting the process only shortly before signing can create avoidable coverage issues.

About Dirk de Waard

Dirk de Waard is a Dutch corporate and M&A lawyer and partner at Venture Lawyers in Amsterdam. He advises international buyers, sellers, PE investors and law firms on Dutch and cross-border M&A, including W&I-backed acquisitions, Dutch legal due diligence, SPA drafting, disclosure and transaction execution.

Where US or UK lead counsel manages the wider transaction, Dirk can take responsibility for the Dutch corporate and M&A workstream and coordinate the Dutch diligence and SPA positions with the broker and W&I underwriting process.

Dutch counsel for W&I-backed acquisitions

If you are acquiring a Dutch company, running a PE exit or advising on a transaction involving W&I or R&W insurance, contact Dirk at dirk.dewaard@viottalaw.com. He can review the Dutch SPA, warranty and disclosure package, coordinate the Dutch legal diligence workstream and help align the transaction documents with the proposed insurance structure.