Representations and Warranties Insurance (RWI) has become a standard deal tool. Buyers purchase it to obtain recourse independent of the seller. RWI can strengthen a Buyer’s bid for attractive targets while giving Sellers a clean exit: no indemnity, minimal escrow and little post-closing exposure (absent fraud). Commentators have devoted much attention to RWI’s role in facilitating acquisitions, but Buyers often overlook the policy’s value as a dedicated, meaningful source of recovery when a Seller representation proves inaccurate.
