Introduction
Representations and warranties insurance policies are often viewed as relatively standardized products. While many policies share common structures and core provisions, important differences frequently exist beneath the surface. As a result, seemingly minor wording changes negotiated during underwriting can have significant implications when a claim arises.
Continue Reading RWI in Practice: A 7-Part Series for Deal ProfessionalsWhen private equity fund managers think about insurance, they usually think of Representations & Warranties Insurance (“RWI”). That makes sense—RWI covers representations baked into the deal itself that are front of mind when buying and selling portfolio companies (“PortCos”). But once a deal closes and a PortCo continues operations under new PE ownership, a whole new set of operational issues unrelated to pre-closing representations can surface, giving rise to potential claims under a host of different lines of insurance, including directors and officers (“D&O”), errors and omissions (“E&O”), cyber, crime/fiduciary, general/limited partner (“GP/LP”), commercial general liability (“CGL”), and property policies, among others. To make matters worse, coverage gaps between policies issued at the fund level and the PortCo level, finger-pointing between insurers, lapsed policies, and inadequate coverage can result in substantial financial losses for the PE Fund and PortCo alike.
Continue Reading Non-Deal Exposure: Practical Tips for Enhancing Insurance Coverage For Private Equity Funds and Portfolio CompaniesIntroduction
One of the foundational assumptions underlying representations and warranties insurance (“RWI”) is that the buyer has conducted a reasonable diligence process prior to closing. Although RWI is designed to transfer certain post-closing risks to an insurer, it is not intended to replace diligence or insure against risks that were insufficiently investigated.
Continue Reading RWI in Practice: A 7-Part Series for Deal ProfessionalsIntroduction
Representations and warranties insurance (“RWI”) has rapidly evolved from a niche product used in select transactions to a near-standard feature in middle-market private equity deals. What was once viewed as an optional risk-transfer tool is now often a central component of deal structuring—influencing everything from bid competitiveness to post-closing risk allocation.
Continue Reading RWI in Practice: A 7-Part Series for Deal ProfessionalsOn January 27, 2026, the Delaware Supreme Court issued a significant pro-policyholder decision affirming that directors and officers (“D&O”) insurers must cover a $28 million settlement paid by Harman International Industries Inc., to resolve stockholder litigation arising from its multi-billion dollar sale to Samsung Electronics Co., Ltd. The Court affirmed the Superior Court’s ruling that…
On Jan. 15, 2021, a New York state court judge issued an opinion denying an insurer’s motion to dismiss a claim for coverage under a representations and warranties insurance (RWI) policy in WPP Group USA, Inc. v. RB/TDM Investors, LLC et al. More specifically, the court rejected the insurer’s argument that the claim was subject to certain exclusions under the policy and ordered the parties to proceed with discovery.
The court’s decision is interesting in several respects — not the least of which is that judicial opinions relating to RWI policies are quite rare. RWI policies are generally purchased by transactional buyers seeking to guard against misrepresentations made by sellers during the acquisition process without having to seek recourse against the sellers themselves for any potential losses. Typically, these policies provide that any disputes concerning an insurer’s coverage or payment obligations are to be resolved in confidential arbitration proceedings that do not generate public opinions. The RWI policy at issue in WPP Group, however, provided the insured with the option of bringing claims regarding the policy in either confidential arbitration or in New York state or federal courts.Continue Reading Arbitration vs. Litigation: More Than Just a Preference for RWI Policyholders
