Indemnification Clauses
(Representations and Warranties Insurance)

Summary

These indemnification clauses may be used in an acquisition transaction in which a representations and warranties insurance policy (RWI) will be a source for claims under the parties' indemnification obligations. These clauses include practical guidance and drafting notes. Note that these clauses are generally drafted to align with the terms of the RWI policy, and therefore the policy must be carefully reviewed for items such as scope of coverage, exclusions, and the retention amount. The clause language itself may not seem particularly tailored for use of RWI; instead, in the clauses you should reflect the business agreement of the parties (e.g., allocation of the policy retention amount between the buyer and seller and the order of recovery sources for indemnification claims). The definitions used in these indemnification clauses should be consistent with the defined terms used in the underlying transaction document. For deeper discussion of representations and warranties insurance in M&A transactions, see Representations and Warranties Insurance Policy Selection and Representations and Warranties Insurance Drafting and Counseling Considerations. For additional clauses, see Representations and Warranties Insurance Covenant Clause and Representations and Warranties Insurance Closing Condition Clause.