Reps & Warranties Insurance
  

The letter of intent has been signed, both buyer and seller take their seats at the bargaining table and the negotiations begin. They muddle through the Purchase & Sales agreement only to be caught up in the indemnification provisions. The buyer wants financial recourse against the seller if these statements are not accurate and the buyer sustains a loss. This illustrates the possible need for Transaction Liability/Reps & Warranties Insurance.

Features of a Reps and Warranties Policy could include:

  • Either the Buyer or the Seller may be the insured party.
  • Policy terms mirror the applicable survival period of the reps and warranties.
  • Policies may be written to cover all the reps and warranties, or a subset thereof.
  • Policies may be "excess" of an escrow amount or other self-insured retention, or may sometimes replace the escrow altogether.

Insurers are willing to insure most customary reps and warranties, although many policies exclude environmental matters.