Warranty and indemnity insurance (as the name suggests) is an insurance policy to cover warranties and indemnities given by a party to another. The insurance can be taken out by either the buyer or seller and is based on a risk assessment on the part of the insurer/ underwriters.
It is worthy to note that most warranty and indemnity insurance policies do not provide protection for specific indemnities for known matters which have been fairly disclosed so there is no substitute for common sense enquiries and circumventing standard disclosure.
In practice buyers like to have such a policy in place as an insurance company is more likely to be stable and ain a better position to pay in the event of an insured claim as compared to a seller.
As for a seller an insurance policy may circumvent the need to have money put in escrow (kept in the fridge) for a period of time, it can cover any potential claim arising in the future (when the seller may not have so much money at his disposal) which would cause the seller concern.
Buyers can now purchase warranty and indemnity insurance so that they can obtain the level of insurance cover that they want. To serve as a top-up to what the seller is offering. Also in given circumstances- for example where the sellers are old and going in to retirement this can serve to be quite useful.