Definition
Rep & Warranty Insurance (RWI)
Insurance policy that absorbs breach-of-rep claims, allowing sellers to take more cash at close.
RWI shifts indemnity risk from the seller's escrow to an insurer. Premiums are typically 2.5–4% of policy limit, with retention (deductible) of 0.5–1% of EV. The trade-off: cleaner exit for the seller, faster claims process for the buyer, but tighter underwriting requirements during diligence. Now standard on most mid-market and upper-mid-market deals.
See also
Read further in The Guide