Photo: Shutterstock.comIn just the past five years, representations and warranties (R&W) insurance has evolved from a niche product into a market that covers tens of billions of dollars in risk. This dramatic increase in policies written has predictably led to a corresponding increase in the number of claims—a number that is sure to grow even more with the global disruption caused by COVID-19. This article discusses key issues that are likely to arise in numerous claims on R&W policies in our post-COVID world, and provides some practical suggestions for both insurers and policyholders to resolve them efficiently and according to policy terms.
The R&W Insurance Market
R&W insurance provides coverage for losses caused by breaches of representations and warranties made by a seller in a corporate merger or acquisition. R&W insurance replaces in part—and increasingly in whole—the indemnifications, escrows, and other protections traditionally provided by a seller to the buyer as part of the transaction.
