Page 10 - Representation & Warranties Insurance

• Policy term. Similar to survival periods for seller • Transaction agreement. Because the RWI policy
indemnification, an insurer’s willingness to accept the covers representations and warranties made by the
risk of a breach in exchange for a fee is limited to a seller within the operative transaction agreement, the
finite period of time, known as the policy term or policy transaction agreement document itself is a component
period. The policy term represents the period of time of, and is referred to within, the RWI policy. The RWI
during which an insured can notify the insurer of a policy may refer to certain terms or sections of the
breach. Although many policies allow for a grace period operative transaction agreement when defining the
after the expiration of the policy term (45 days, for scope and terms of coverage.
example), in general, insureds must notify the insurer
of any breach within the policy term in order for the Although the components of an RWI policy provide a
resulting loss to be covered. basic framework of policy terms, every policy is different.
It is important to carefully read each policy to understand
the scope of coverage, because some policies may differ
from this framework.

6 Representations and Warranties Insurance