What Is Representations and Warranties Insurance?
Representations and warranties insurance addresses financial loss from inaccurate statements in a business purchase agreement.
What Does Representations and Warranties Insurance Cover?
Representations and warranties insurance addresses financial loss from inaccuracies in the representations or warranties made in a stock or asset purchase agreement. 2,1Statements in the Sale Agreement
Representations and warranties are statements of fact about the business being sold; an indemnity is a separate promise to be responsible for another party’s loss if a described event occurs. 1Who Is Insured and Who Can Recover
Confirm whether the buyer or seller is insured, and ask who can recover under the policy and how that recovery interacts with claims against the seller. 1,2,3| Question | Why it matters in a stock purchase |
|---|---|
| Is the buyer or the seller insured? | The two structures answer different loss paths. |
| Who can recover under the policy? | Recovery is not automatic from the product label. |
| How does recovery interact with claims against the seller? | Remaining seller indemnity still belongs in the same conversation. |
Who Needs Representations and Warranties Insurance?
Consider R&W for a stock or asset purchase, alongside the purchase agreement, disclosures and due-diligence findings. 2,3,1
Coverage Examples
These are examples, not coverage guarantees. Your policy terms and the facts of the claim determine what is covered.
What happened
An Inaccuracy Comes to Light After Closing
After buying a business, you discover that a statement in the purchase agreement was inaccurate.
What happened
Diligence Finds a Problem Before Signing
Your team identifies a potential problem before signing the purchase agreement.
How Do You Compare Coverage and Costs?
The Purchase Agreement and the Policy
Compare the representations in the purchase agreement and disclosure schedules with the statements the policy is intended to insure. 2,1Limit, Retention and Duration
Compare the proposed limit and retention with the size of the deal and the remaining seller indemnity, and ask how long the policy runs after closing. 2,1A deal may retain seller indemnity, escrow or other security even when insurance is purchased. Compare those protections with the policy's limit and retention. The insurance and purchase agreement need to work together; buying a policy doesn't itself remove the seller's remaining contractual obligations. 1 2,1
What Known Issues Should You Discuss?
Ask how the quote treats issues already known from due diligence or disclosure, as opposed to inaccuracies that were not known when the deal was signed. 3,1,2| Example issue | Question to ask |
|---|---|
| An accounting error that was not known at signing | Is this the kind of inaccuracy the quote is meant to address? |
| A tax exposure already flagged in diligence | How does the quote treat a known issue? |
| A dispute about the purchase price | Is this a representations and warranties question at all? |
How Does It Compare With Related Coverage?
Other Deal Products
Tax, contingent-liability and other transaction products are separate from representations and warranties insurance; list each product in the quote rather than treating the package name as complete. 2,1,3Ongoing Management Liability
Representations and warranties insurance is arranged around a specific transaction; it is a different discussion from the company’s ongoing directors and officers or management liability coverage. 2,1,4What Do You Need for a Quote?
Prepare the draft purchase agreement and disclosure schedules, due-diligence reports, a description of the buyer, seller and transaction, and any issues already identified that should be discussed with the insurer. 2,3,1Deal Documents and Diligence
| Prepare | How to use it |
|---|---|
| Draft purchase agreement and disclosure schedules | Match insured statements to the actual representations |
| Due-diligence reports | Separate known issues from unknown inaccuracies |
| Description of the buyer, seller and transaction | Confirm who is insured and who can recover |
| Remaining seller indemnity, escrow or other security | Compare limit, retention and remaining contractual protection |
| Issues already identified | Ask how the quote treats them |
Key Terms in Plain English
Representation or Warranty
A statement of fact about the business being sold, made in the transaction agreement. 1
Seller Indemnity
A separate promise by the seller to be responsible for a described loss; compare it with the policy and remaining escrow. 1 1
Frequently Asked Questions
Does R&W Replace Ongoing D&O Coverage?
Can R&W Cover Issues Found During Diligence?
Does Representations and Warranties Insurance Protect the Buyer or the Seller?
Which Insurance Providers Offer Representations and warranties?
Sources
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- Corgi Insurance homepage. Corgi Insurance Services, Inc.; Product packages: Cyber and Directors & Officers; Growth Stage and Custom Package; Self-Serve (apply, get quoted in minutes, bind same-day) and Book a Demo paths; Explore Our Main Policies: Commercial General Liability, Crime Insurance, Fiduciary Liability, Hired and Non-Owned Auto (HNOA), Worker’s Compensation; Specialized coverages: Employment Practices Liability (EPLI), K&R (Kidnap & Ransom), Representations and Warranties; Commercial Umbrella Liability; Business Owners Policy (BOP); Coverage sales cards: Media Liability, Medical Malpractice, Miscellaneous E&O; Core Operations: Tech E&O Insurance; Tech & AI Liability product module; Transportation menu: Auto Liability, Contractual Liability Insurance - Cargo; FAQ on cost, claims, and binding; footer entity, program-administrator and issuing-carrier notices. Accessed 2026-09-16.
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