How to Reconcile Buy-Side Warranty-Insurance Exclusions with the SPA Warranty Schedule

Walk the warranty spreadsheet one row at a time. A covered mark starts the row. It does not finish it. Name the exclusion that still cuts that warranty, and record one fallback before you sign.

An accounts row can read covered while pension underfunding and leakage stay excluded. An environment row can read covered for one site, while thin diligence leads the insurer to exclude the property warranty.

Disclaimer: Checkory provides AI support, not legal advice. Consult a qualified lawyer for binding decisions.

Why is covered only the first mark on a warranty row?

The spreadsheet status is the insurer’s first position, not a promise of payment. Fieldfisher, on 29 September 2026, treats the policy as a separate contract: general exclusions can still exclude loss on a row marked covered. A blank cell is outside cover until the insurer confirms a status.

In Project Angel Bidco [2024] EWCA Civ 446, the anti-bribery warranties were covered, and clause 5 could still exclude loss on that obligation. The Court of Appeal refused to change “liability or” to “liability for”, because it was not clear which line was wrong. Howden’s note of [2023] EWHC 2649 (Comm) covers the High Court decision, not the appeal: a covered warranty stays subject to clause 5.

Which general exclusion still cuts that row?

Pass every open row through the general exclusions and name the one that still cuts it. Bird & Bird’s Q&A of 30 April 2026 is German practice, not an England and Wales form. Statuses are fully covered, partially covered with modifications, or excluded. Check buyer knowledge, fraud, fair disclosure, fines, pensions, and price adjustments against your clause.

WTW, on 26 September 2024, splits exclusions into general, deal-specific, and warranty amendments. General items include deal-team knowledge, locked-box leakage, and uninsurable fines. Aon’s eBook adds pension underfunding and matters fairly disclosed in a data room or due diligence report. A pension exclusion can also cut the accounts warranty.

Which SPA warranty does a deal-specific exclusion switch off?

Name the warranty the exclusion switches off. Where thin diligence is the reason, negotiate a narrow exclusion of the named risk. A known tax point can move to a contingent policy for an extra premium.

Sebastian Pauls, on 26 July 2020, describes environmental warranties marked covered while a general exclusion removes environmental loss. One bad site can lead an insurer to refuse cover for the other sites. Limit a pensions comment to that warranty, or it can also cut the accounts warranty.

How do the SPA knowledge test and the policy exclusion differ?

Write the two tests side by side. A narrower disclosure letter does not preserve policy cover. In Finsbury Food [2023] EWHC 1559 (Comm), the seller was not liable if the buyer knew the circumstances and knew they were reasonably likely to be a warranty claim. Knowledge was limited to Steve Boyd, Julie Turnbull, and Jas Randhawa.

Actual knowledge meant personal knowledge, not constructive or imputed knowledge. Only the transaction team’s knowledge counted. Loss was barred if a team member knew before commencement, or learned of the breach from the data room or due diligence materials. Travers Smith, on 27 July 2023, notes that wilful blindness counted as actual knowledge, and that Finsbury would have paid £20 million in any event.

Dentons, on 28 January 2026, treats policy exclusions as additional to the share purchase agreement, including matters identified in due diligence reports. If the policy uses a lower threshold than actual knowledge, mark it. Do not average the two tests.

Who must be notified before a seller claim is settled?

Record seller notice, insurer or broker notice, and consent before settlement in one place. Fix a mismatch before you sign. Most policies want notice as soon as reasonably practicable. Some refuse cover for late notice alone, even with no harm. Settling without the insurer can lose the recovery.

A&O Shearman says both deadlines have to be met, or the claim can be cut off. Record who is written to and who controls the claim against the seller. William Fry, on 4 June 2026, describes Irish practice, not this draft: general warranties of two to three years, and tax warranties of five years from the end of the completion year. Do not copy them across. On disputes, Bird & Bird wants the same court or arbitration for the policy and the share purchase agreement.

What fallback do you record before you sign?

Each open gap gets one fallback, and the table is the sign-off list. Choose a seller indemnity, an escrow, contingent cover, or a written acceptance. Do not invent a price reduction and call it market practice.

Marsh says the seller, or an escrow, stands behind the uncovered liability. Kennedys, on 31 March 2026, is a US note, not an English form. A seller indemnity can remain on excluded items. Read the retention clause. Add the no-claims declaration at signing and at closing. Work in this order: spreadsheet row, general exclusion, deal-specific exclusion, knowledge and disclosure, notice and consent, then one fallback.

Stop when every gap has one fallback: amend the exclusion or the comment, require seller recourse or contingent cover, or sign only with that risk accepted. A covered row that skips the exclusions is not finished. Verify the knowledge tests before you sign.

On this table, leakage means the policy exclusion against a spreadsheet row, not the locked-box price mechanic set out in the locked-box note. It is also not a guide to drafting seller knowledge qualifiers on the warranties themselves, set out in the knowledge-qualifier note.