Reps & warranty insurance insures the buyer from a breach of reps & warranties in the purchase agreement.  A purchase agreement's representations can include data security, outstanding taxes, and accounting policies, which insurance would not otherwise cover.  If there’s a breach, the buyer (or seller) would tap the insurance policy instead of an escrow or other mechanism. Without reps & warranty insurance, a portion of the seller's closing proceeds would generally  be held in an escrow to protect against potential breaches.  The escrow is typically 10% of the purchase price and stays in place for 12 to 24 months.  Reps & warranty insurance can … [Read more...]