The policy indemnifies the buyer for breaches of the seller's representations, permitting reduced escrow and indemnification caps. Coverage excludes known issues, purchase price adjustments, and matters disclosed in diligence.
Buy-side policies are the standard structure.
Alternative Names:
RWI|Rep and Warranty Insurance
Why it Matters?
The known-issue exclusion is the coverage limitation that surprises buyers, since anything surfaced in diligence and disclosed is outside the policy and must be addressed through a specific indemnity or price adjustment. Underwriters also review the diligence itself, and thin diligence produces broader exclusions. The policy has changed deal structure by removing the seller as the practical claim target, which sellers value as clean exit and buyers accept for the credit substitution.
Frequently Confused with
Related terms
Frequently asked questions
What does the policy exclude?
How has it changed deal structure?
