The adviser’s starting point
Start with the recourse your client expects after closing. Then compare that with the representations, survival periods, and indemnity the seller will provide. RWI may offer another way to allocate that risk. Raise the option before the parties settle those terms.
The product will not fit every transaction, and the decision belongs to the client. The adviser’s role is to make sure the option is considered while it can still shape the purchase agreement, rather than after a structure has been agreed that is difficult to insure. A preliminary, non-binding indication can show what protection is available and roughly what it would cost before anyone commits.
Questions to raise before the bid
- Coverage. Which representations matter most, which matters are likely excluded, and are synthetic representations worth discussing with insurers?
- Cost. What are the premium, underwriting fee, taxes, and any placement fee — and who will bear them?
- Diligence. Will the diligence record support underwriting, and will it be substantially complete in time?
- Timing. When must coverage bind relative to signing and the go-hard date?
- Recourse. What will each party’s position be if a breach is discovered after closing?
Educational summary only, written for this page. Nothing here is an offer of insurance, legal advice, or a quote; availability, pricing, and coverage depend on underwriting and the terms of the policy actually issued.