Representations And Warranties: Environmental Liability Insurance

Buyers and sellers are using representations and warranties insurance more frequently in M&A transactions as a means to enhance bids in competitive auction processes and to limit exposure to post-closing indemnification liabilities. Representations and warranties insurance has been previously discussed on this blog generally (see here, here, and here), including how it can be beneficial to buyers and sellers in transactions by providing access to the insurance industry's capital and allowing the transfer of certain transaction-related risks in M&A deals to the insurance market.

Representations and warranties insurance coverage can, however, be tailored to mitigate specific types of risk in transactions. Insofar as environmental risk has become a more prevalent concern in M&A transactions, environmental liability insurance is gaining popularity amongst both buyers and sellers. In pushing for environmental insurance coverage, buyers seek to avoid