# W&I insurance in Estonia: a guide for insurers URL: https://insurancelawestonia.ee/guides/warranty-and-indemnity-insurance-estonia/ Author: Dr Olavi-Jüri Luik, Partner, Head of Insurance Law, attorney at law (Advokaadibüroo WIDEN OÜ) Last updated: 2026-11-05 > W&I insurance for Estonian deals: the SPA under Estonian sales law, knowledge and fraud, limitation, no-claims declarations and large risks. Warranty and indemnity (W&I) insurance is still used relatively rarely in Baltic M&A, but it is becoming more common, including in mid-sized deals. For an underwriter or claims handler, an Estonian deal raises two separate sets of questions. The first concerns the share or asset purchase agreement (SPA): when it is governed by Estonian law, the Law of Obligations Act (*võlaõigusseadus*, VÕS) supplies default rules on the buyer's knowledge, notice, caps and limitation that shape what a "breach" is. The second concerns the policy itself: if Estonian insurance contract law applies, its semi-mandatory rules on disclosure, withdrawal and limitation may override the wording unless the buyer is a large-risk policyholder. This guide covers both and ends with a checklist. ## 1. The SPA under Estonian law ### 1.1 Sale of shares is a sale of rights The rules on the sale of goods apply correspondingly to the sale of rights and other objects, unless the law provides otherwise or this is incompatible with the nature of the object.[^1] A share purchase is therefore subject to the sales provisions of VÕS, except where the parties have displaced them. Estonian SPAs usually contain a complete warranty and claims regime, but anything the SPA does not regulate falls back on the statute. ### 1.2 The buyer's knowledge The seller is not liable for a lack of conformity that the buyer knew or ought to have known when the contract was concluded; this rule does not apply to consumer sales.[^1] In a business-to-business deal, Estonian law therefore starts from an anti-sandbagging position. SPAs often reverse it expressly, or confirm it. The W&I policy's knowledge exclusion is a separate matter and is usually narrower, limited to the actual knowledge of named deal-team members. Underwriters should read both: if the SPA leaves the statutory rule in place, the seller may have no liability for matters the buyer "ought to have known" from the data room, and there may be nothing to indemnify under a sell-side policy. ### 1.3 Inspection and notice A buyer acting in the course of business must inspect the purchased object without delay and notify the lack of conformity within a reasonable time with sufficient precision; otherwise it cannot rely on it.[^1] SPAs normally replace this with their own claims notice mechanism, and buy-side policies refer to that mechanism. The two sets of deadlines must match. ### 1.4 Caps, fraud and deliberate non-disclosure Liability may be excluded or limited in advance, but an agreement excluding or limiting liability for an intentional breach is void.[^2] In addition, the seller cannot rely on an agreement excluding or limiting the buyer's rights if the seller knew or ought to have known of the lack of conformity and did not disclose it.[^1] A seller that concealed a known problem is therefore not protected by the SPA cap; this is the situation in which W&I insurers typically preserve subrogation against the seller. ### 1.5 Limitation The limitation period for claims arising from a transaction is three years, or ten years where the obligor breached its obligations intentionally.[^3] For claims arising from a lack of conformity of a sold object, the period starts with delivery to the buyer.[^1] The parties may shorten the limitation period by agreement, but the shortened period does not apply to intentional breaches; they may extend a period of less than ten years up to ten years.[^3] SPA survival periods and the policy period should be aligned with these rules. ## 2. The policy under Estonian insurance contract law ### 2.1 Classification and large risks Estonian supervisory law does not list W&I as a separate class. A buy-side policy is in substance financial loss insurance and a sell-side policy is general liability insurance (Insurance Activities Act (*kindlustustegevuse seadus*, KindlTS) § 12 lg 1 points 16 and 13).[^4] The classification matters because VÕS § 427 lg 1 makes a long list of policyholder-protective rules mandatory, but lg 3 disapplies them for these classes where the policyholder meets at least two of three criteria: balance sheet total above EUR 6.6 million, net turnover above EUR 13.6 million, or at least 250 employees on average; for group companies the consolidated figures are used (lg 4).[^5] A newly formed acquisition vehicle may not meet the criteria on its own. Unless it belongs to a consolidation group whose figures qualify, the protective rules apply even to a London-form wording. The applicable law analysis under Rome I art 7 must be done separately, because the Rome I large-risk concept and VÕS § 427 lg 3 are not identical. See [large risks](https://insurancelawestonia.ee/estonian-insurance-contract-law/large-risks). ### 2.2 No-claims declarations and disclosure The policyholder must disclose all circumstances known to it that are material to the insurer's decision; a circumstance about which the insurer asked in a form that can be reproduced in writing is presumed material.[^5] In a W&I placement, the no-claims declarations at signing and closing perform this function. If the buyer fails to disclose a known breach, the insurer may withdraw; where disclosure was made on the basis of written questions, withdrawal for an unasked circumstance requires intentional concealment. Withdrawal must be declared within one month of the insurer learning, or when it ought to have learned, of the breach, and not after three years from conclusion; the right to avoid the contract for fraud is preserved.[^5] Where the semi-mandatory rules apply, a wording that gives the insurer a broader remedy for an inaccurate declaration is ineffective to that extent. See [pre-contractual disclosure](https://insurancelawestonia.ee/estonian-insurance-contract-law/pre-contractual-disclosure). ### 2.3 Exclusions are not conditions The knowledge exclusion and deal-specific exclusions define the scope of cover. Under Estonian law they are not obligations of the policyholder, so the fault and causation test of VÕS § 452 lg 2 does not apply to them. Estonian courts characterise clauses by substance, however: a clause that in reality requires the insured to act in a certain way may be treated as an obligation. See [exclusions vs obligations](https://insurancelawestonia.ee/estonian-insurance-contract-law/exclusions-vs-obligations). ### 2.4 Subrogation and the seller's cap On payment, the insured's claim against a third party passes to the insurer to the extent of the indemnity; if the policyholder waives its claim against the third party, the insurer is released to the extent it could have recovered.[^5] An SPA cap or no-recourse clause is, in substance, such a waiver. The policy should therefore expressly accept the SPA's limitations of liability and define when subrogation against the seller survives, usually fraud. See [subrogation](https://insurancelawestonia.ee/estonian-insurance-contract-law/subrogation). ### 2.5 Limitation of claims under the policy Claims under an insurance contract become time-barred three years from the end of the calendar year in which they became due. Notification suspends the period until the policyholder receives the insurer's decision, subject to a ten-year long-stop. If the insurer refuses in writing and states the consequence, the policyholder must sue within one year.[^5] Where § 427 lg 3 applies, the policy may regulate these periods differently. See [limitation and the one-year action period](https://insurancelawestonia.ee/estonian-insurance-contract-law/limitation-and-one-year-action-period). ## 3. Handling a W&I claim in Estonia - **Evidence.** The disclosed data room, the disclosure letter and the due diligence reports decide what the buyer knew. A preserved, unaltered copy of the data room is essential. - **Loss.** Agree in the policy how loss is measured (diminution in the value of the shares or the target's own loss) and whether a "materiality scrape" applies; Estonian courts will otherwise apply general damages rules. - **Parallel procedures.** Notice to the seller under the SPA and to the insurer under the policy must both be given in time. Tax warranty claims often involve the Estonian Tax and Customs Board and follow their own timetable. - **Forum.** Estonian SPAs frequently refer disputes to arbitration, while the policy may have a different forum and law. Coordinate early to avoid inconsistent findings. See [arbitration of insurance disputes](https://insurancelawestonia.ee/guides/arbitration-insurance-disputes-estonia). ## 4. Checklist for underwriters and claims handlers 1. Identify the law governing the SPA and the policy, and whether the buyer meets the VÕS § 427 lg 3–4 criteria. 2. Check whether the SPA displaces VÕS § 218 lg 4 (buyer's knowledge) and the statutory notice rules. 3. Align the SPA survival periods, the policy period and the limitation rules. 4. Draft the no-claims declarations with the § 440–442 framework in mind and identify whose knowledge counts. 5. Expressly accept the SPA cap and define subrogation against the seller for fraud. 6. After closing, consider the target's D&O run-off; see [D&O claims in Estonia](https://insurancelawestonia.ee/guides/d-and-o-claims-estonia). ## Related pages - [W&I insurance is gaining ground in Baltic M&A](https://insurancelawestonia.ee/blog/2026-08-06-w-and-i-insurance-baltic-deals) - [D&O claims in Estonia](https://insurancelawestonia.ee/guides/d-and-o-claims-estonia) - [Large risks](https://insurancelawestonia.ee/estonian-insurance-contract-law/large-risks) - [Reviewing policy wordings under Estonian law](https://insurancelawestonia.ee/guides/policy-wording-review-estonian-law) - [Choice of law and jurisdiction](https://insurancelawestonia.ee/guides/choice-of-law-jurisdiction-insurance-estonia) ## References [^1]: Law of Obligations Act (võlaõigusseadus, VÕS) § 208 lg 3, § 218 lg 4, § 219 lg 1, § 220 lg 1–3, § 221 lg 2, § 227 lg 1. RT I, 20.06.2026, 18 (in force 01.09.2026). Estonian: ; English: . [^2]: VÕS § 106 lg 1–2 (n 1). [^3]: General Part of the Civil Code Act (tsiviilseadustiku üldosa seadus, TsÜS) § 145 lg 1–2, § 146 lg 1 and 4. RT I, 31.12.2024, 48 (in force 01.01.2025). Estonian: ; English: . [^4]: Insurance Activities Act (kindlustustegevuse seadus, KindlTS) § 12 lg 1 points 13 and 16. RT I, 11.07.2026, 140 (in force 21.07.2026). . [^5]: VÕS § 427 lg 1, 3 and 4, § 440 lg 1, § 441 lg 1, 3 and 5, § 442 lg 1, § 475 lg 1–3, § 492 lg 1–2 (n 1).