Representations & warranties insurance

Insurance covering specified losses from breaches of representations and warranties in a transaction, subject to policy terms. Buyer-side and seller-side policies protect different insured parties; coverage can reduce the need for seller indemnities or escrow.

Representations & warranties insurance in practice

Hypothetical: a buyer proposes holding 10% of the purchase price in escrow for 18 months. The parties negotiate insurance that may reduce the escrow. They still allocate the policy retention, excluded risks, and any remaining seller obligations; buying a policy does not automatically release every dollar at closing.

Reference

Coverage reference: Aon: Representations and warranties insurance. The example above is hypothetical.

Reps, warranties & indemnities · Escrow · Indemnity cap · Survival period · Disclosure schedule · All of the glossary