Skip to main content
Newsletter
BankingBeast

Representation and warranty insurance (RWI)

Last updated

Quick Answer

Representation and warranty insurance transfers the risk of a breach of the seller's representations from the seller to an insurer.1,2

What it is

The policy carries a retention the buyer absorbs first, excludes known matters and a list of underwritten exclusions, and requires an underwriting call and a no-claims declaration before binding. Its presence reshapes the whole indemnity package rather than merely lowering the cap, because the buyer's recourse shifts from the seller to the insurer.1,2

Operational context

What good looks like

Why It Matters

Two cautions travel with every published figure on this instrument. The market data comes from insurance brokers describing their own market, and underwriters have been increasing scrutiny of diligence quality — which means a thin diligence file can change what the policy will cover, not just what it costs.1

Term Family

Related concepts

Indemnity cap

Related Questions

What is a typical escrow in a private M&A deal?

The answer depends entirely on whether there is representation and warranty insurance, and any figure quoted without that split is unusable.

Browse all questions →

Frequently Asked Questions

What is Representation and warranty insurance (RWI) in venture capital?

The policy carries a retention the buyer absorbs first, excludes known matters and a list of underwritten exclusions, and requires an underwriting call and a no-claims declaration before binding.

Why is Representation and warranty insurance (RWI) important for startups?

Understanding Representation and warranty insurance (RWI) is critical for founders navigating the fundraising process. It directly impacts deal terms, valuation, and the relationship between founders and investors.

Sources & References

  1. 1.T2-03 — ABA Business Law TodayAnnouncing the ABA's 2025 Private Target M&A Deal Points StudyABA Business Law Today(Representation and warranty insurance transfers the risk of a breach of the seller's representations from the seller to an insurer.)primary · T2 · deal-documents · instrument
  2. 2.T3-01 — Goulston & Storrs2025 ABA Private Target M&A Deal Points Study — What's Market?Goulston & Storrs(Representation and warranty insurance transfers the risk of a breach of the seller's representations from the seller to an insurer.)secondary · T3 · deal-documents · instrument
  3. 3.T3-02 — K&L Gates2025 ABA Private Target M&A Deal Points StudyK&L Gates(Representation and warranty insurance transfers the risk of a breach of the seller's representations from the seller to an insurer.)secondary · T3 · deal-documents · instrument
  4. 4.T4-07 — CBIZRepresentations and Warranties Insurance in 2025: M&A Trends and Best PracticesCBIZ(Representation and warranty insurance transfers the risk of a breach of the seller's representations from the seller to an insurer.)orientation · T4 · deal-documents · instrument

Newsletter

BankingBeast Brief

Deal execution, credit terms, and closing mechanics. Every Tuesday.

Archstone

Run your fund like an institution.

See Archstone