What Representations and Warranties Insurance is, how it applies to commercial real estate and other real-asset transactions, and where it tends to fit in the deal.
Representations and Warranties Insurance (RWI) is a specialized insurance policy that can cover losses from breaches of representations and warranties in a purchase and sale agreement. In real-asset transactions, it can shift specified post-closing risk from the seller indemnity package to an insurer — giving the buyer a direct recovery path and the seller a cleaner exit.
Coverage tracks the reps actually given in the PSA and the diligence record supporting them. On real-asset deals, buyers often look at title and survey matters, property condition, environmental, leases and rent roll, zoning and land use, permits, tax, contracts, and access rights. In some transactions, insurers may consider synthetic representations the seller did not make, based on buyer diligence and subject to underwriting.
RWI is typically buyer-side. Limits commonly run a percentage of enterprise value or coverage need; retention typically steps down at 12 months; survival generally extends beyond the PSA. Premium, retention, exclusions, and policy terms are deal-specific and remain subject to underwriting, insurer appetite, the transaction documents, and the diligence record.
The placement typically runs alongside buyer diligence, with submissions going out once the PSA and key diligence (QofE-equivalent, Phase I, PCA, rent roll) are in reasonable shape. The policy is generally bound at signing or closing. RWI is not a substitute for diligence; it is a risk-transfer wrapper around it.
This primer is informational. It is not legal, tax, regulatory, or investment advice. WolfTRI is a licensed retail insurance brokerage — not a law firm, tax advisor, investment advisor, underwriter, or insurer. Coverage remains subject to underwriting, insurer appetite, policy terms, exclusions, retention, transaction documents, and the diligence record.