Whether buying, selling, or investing in a business, every transaction carries some level of risk. Deal insurance is designed to help manage a variety of potential risks, allowing transactions to move forward more smoothly with greater certainty and ease.
Deal Insurance compliments due diligence, by transferring certain identified or contingent risks to an insurer. Policies can be tailored to the specific transaction and may cover a variety of potential liabilities, including:
- Representations and Warranties (R&W) Insurance: protects against losses resulting from inaccuracies in a seller’s representations or warranties.
- Tax Liability Insurance: provides coverage for identified tax risks or uncertain tax positions.
- Contingent Liability Insurance: addresses known legal or financial risks.
- Environmental Liability Insurance: can help protect against certain environmental cleanup costs and related claims.
Deal insurance can help make the process smoother. It may reduce the amount of money that needs to be held in escrow after closing, limit certain future financial risks, and make it easier for buyers and sellers to reach an agreement. It can also provide peace of mind when unexpected issues or uncertainties arise during a transaction.
Deal insurance has become a valuable tool for managing risk given the complexity of business transactions. Understanding the available coverage options early in the process can help buyers and sellers address potential issues and avoid surprises.
D’Ambrosio LLP works with clients throughout the deal process, helping identify legal risks, coordinate with insurance advisors, and develop strategies that support successful closings while protecting clients’ long-term interests.
