RWI on a property deal, in brief
Representations and warranties insurance (RWI) is a policy, usually bought by the buyer, that responds to loss from covered breaches of the seller’s representations in the purchase and sale agreement. On a property deal it can take the place of some or all of the post-closing indemnity a seller would otherwise give: the seller can close with less retained liability, and the buyer can negotiate a limit and claim period that a capped, short-lived seller indemnity rarely offers.
Cost and terms are set deal by deal. As illustrative ranges discussed in the guide, premium has run roughly 1.7–2.0% of the limit, the retention 0.10–0.25% of deal value (often stepping down at month 12), and limits about 5–10% of the purchase price. Insurers also charge an underwriting fee, and surplus-lines taxes apply. None of these figures is a quote.
Timing matters most. Raise RWI at the bid or letter-of-intent stage so the purchase agreement and the policy can be negotiated together. Underwriting typically begins once diligence is substantially complete, and coverage typically binds on the go-hard date. RWI does not insure known issues, replace diligence, or guarantee the business plan.
Five questions for a first RWI conversation
- Who would be insured — the buyer, or is seller liability protection the better fit?
- What limit does the buyer need, and for how long should claims be possible?
- What retention could the parties accept?
- Will diligence be substantially complete before the go-hard date?
- Which representations matter most for this asset, and which matters are likely to be excluded?
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.