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What Is Reps & Warranties?
Reps & Warranties insurance helps manage the financial risk of a deal when statements made in an M&A transaction turn out to be inaccurate. It can protect buyers or sellers from certain losses tied to breaches of representations and warranties in the purchase agreement.
What Does Reps & Warranties Cover?
It can cover certain losses, defense costs, and settlement amounts when a covered representation in the deal documents is breached. Coverage is typically tied to the purchase agreement, the defined reps, and the policy’s terms and exclusions.
Financials were overstated
Undisclosed tax exposure surfaces
Compliance issue triggers a customer claim
Key Features of Reps & Warranties
Supports cleaner deal negotiations
By shifting certain post-close breach risk to an insurer, the policy can reduce pressure on escrows and indemnity holdbacks, helping both sides move forward with clearer expectations.
Protection aligned to the purchase agreement
Coverage is built around the specific representations and warranties in your deal documents, so the policy responds to defined breaches rather than general business disputes.
Can help with defense and resolution costs
When a covered breach is alleged, the policy may help pay for defense expenses and covered settlements or judgments, subject to retention, limits, and policy conditions.
Reps & Warranties Made Simple
Everything you need to know about this coverage, from basic definitions to real-world application scenarios.
