What is Representations & Warranties Insurance (RWI)?

Insurance designed to cover losses resulting from the breach of representations and warranties within a purchase agreement, typically used:

  • To cover unknown breaches of general and fundamental representations and warranties within a purchase agreement (e.g. financial statements are misstated, IP turns out to be owned by a third-party, environmental permits are not in place, etc.)
  • To supplement existing indemnification limits (the “Cap”) and terms
  • To replace traditional indemnification limits and terms under a purchase agreement
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  • Enhance bids by eliminating or reducing sellers indemnity package (limits, escrows, holdbacks, etc.)
  • Extend survival, limits and other indemnity coverage terms concurrent with standard market policy terms
  • Buyers have the ability to make claims directly against the insurer(s) vs. having to claim against the seller
  • Avoid risk of collecting from multiple seller teams and investors
  • Abbreviate transaction negotiations


  • Eliminate or reduce
    • Escrows or holdbacks
    • Indemnification risk and associated tail liability
    • Cost and hassle of dealing with claims, disputes, etc.
  • Distribute capital early to investors and/or close end-of-life fund
  • Protect passive sellers not in control of operating company
  • Abbreviate transaction negotiations to achieve a quicker exit
  • Box in looming liabilities to close a transaction

Policy details


  • Structured to provide enhanced coverage (i.e. limits, survival periods, etc.)
  • Buyers recourse for covered losses is directly against insurer(s) and not Seller
  • Coverage for Seller(s) fraud is provided to the Insured, or Buyer (insurer retains subrogation rights)
  • Can be structured to allow for a clean exit (ie. public company style exit), known as a “walkaway” structure


  • Typically purchased by seller only when Buyer is unable or unwilling to replace or limit indemnification through a Buyer Policy
  • The policy backstops escrow and/or indemnification of the Insured, up to the full purchase price
  • Insured/Seller is made whole for covered losses from insurer(s) after Buyer has made a claim under the indemnity structure pursuant to the purchase agreement

Policy structure

Standard exclusions

  • Breaches for which a deal team member had actual knowledge/items listed on the to Disclosure Schedules
  • Purchase price, working capital or other similar adjustments, forward looking statements, and covenants
  • Unfunded/Underfunded Benefit Plans, Asbestos or PCB’s
  • Deal-specific exclusions

Steps on implementing a RWI policy

Strategy Meeting Call

UNITEL will have discussions with buyer or target and counsel on goals and how to best approach the insurance market.


UNITEL will gather (i) a draft of the transaction agreement, (ii) a management presentation/CIM,(iii) audited/reviewed financials of the target, and (iv) a general understanding of buyer’s scope of expected diligence. UNITEL will then approach the market for Indication Letters, provide a detailed analysis of each indication, and present the best option(s) to the Insured.


Selected insurer is provided with access to (i) target’s data-room, (ii) third-party diligence reports and (iii) updated transaction documents and schedules.

Policy Negotiation

The insurer will provide the first draft of the insurance policy, and a list of follow up questions to be answered before binding. Insurer and broker policy negotiation timelines will be compressed to meet transaction timing.

Bind Coverage

Once the policy and binder have been negotiated and the deal has been signed, UNITEL will bind coverage with the insurer and provide proof of coverage binder to client.

Diligence Call

UNITEL will organize a diligence call between the insurer, deal team, legal representatives and specialists responsible for each area of diligence.

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