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Inaccuracies in representations and warranties made by the seller or the target company in connection with a merger or acquisition can result in costly liabilities. Buyers can be left without the ability to recover losses and sellers can be forced to hand back a portion of the purchase price.

Representations and warranties insurance helps protect both buyers and sellers involved in these transactions from financial loss in the event inaccuracies in representations and warranties are made. By purchasing representation and warranties insurance, buyers can distinguish a bid, sellers can reduce indemnity obligations, and both parties can close deals with ease and confidence.

Features & Benefits

  • Highly customized coverage for transactions with values from $20 million to $1 billion

  • Ability to match the policy period to the survival period of the representations and warranties—extensions for a longer period on buyer-side policies available upon request

  • Ease of reimbursement for buyers to recover losses directly from the insurer without having to locate and pursue the seller and its assets

  • Protects sellers from having to return a portion of the purchase price in the event the buyer brings a claim

  • Coverage for the complete set of representations and warranties made by a seller, including environmental and intellectual property matters

Coverage

  • Available limits of up to $50 million for any one transaction (larger programs can be arranged on a case-by-case basis)

  • Premiums range from 2-4% of the limit of liability purchased

  • Deductibles are typically between 1-3% of the transaction value

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