Representation and Warranties Insurance Fundamentals
The explosive growth of representations and warranties (R&W) insurance over the last decade is no secret. But, for many, R&W insurance remains an enigma, particularly as respects filing a claim under such policies. Indeed, even those involved in buying R&W insurance may not have experience on the claims end and, as a result, possess little knowledge on how to navigate the assortment of issues that may arise. Of course, policyholders pursuing a claim under an R&W policy should be aware of the minefield of issues that await in establishing the two primary thresholds to recovery: breach and loss. For example, insurers will scrutinize whether a breach of a representation has occurred, often requiring a hyper-technical showing of breach that may not align with the policyholders’ views. Similarly, quantifying the loss resulting from the breach is rarely straightforward and often a source of dispute between insurer and policyholder, particularly as it concerns the use of a multiple.
Recently, Hunton Andrews Kurth LLP attorneys Syed Ahmad, Patrick McDermott, and Kevin Small published a Lexis Practical Guidance note covering the fundamentals of R&W insurance that may be a useful resource for those wanting to learn more about R&W insurance and, in particular, the various issues that may come up when filing a claim. The note explains the R&W insurance product and the underwriting process. It then provides a detailed description of the claim process and identifies common areas of dispute when establishing breach and loss. A copy of the note may be found here.
