W&I insurers - distinction between contractual and tortious damages

It is important for underwriters and claims handlers to be familiar with the distinction between the contractual and tortious measures of damages, and the impact that the applicable measure can have on insurers’ exposure under the policy. The level of insurers’ exposure under a W&I policy in the event of a claim for breach of an SPA warranty may differ significantly depending on the measure of loss as admitted by the wording of the underlying SPA, and the policy wording. A proper understanding of the distinction may guide decisions as to policy wording (in particular as to any specific exclusions) as well as ensuring that insurers are ready to deal with any arguments from the insured in this regard in the event of a coverage dispute.

Our article considering this in more detail can be found here.