Judgment Preservation Insurance Emerges As A Valuable Risk Management Option

Every now and then, an insurance product emerges that addresses risks in a manner that facilitates transactions such that the product becomes a regular part of the dealmaker's toolkit. For example, just over a decade ago, representations and warranties insurance (RWI) policies were introduced and today these policies are a standard requirement in most M&A transactions.

While judgment preservation insurance (JPI) may not have the impact that RWI has had, the increasing popularity of JPI suggests that insureds are discovering that it is a very useful tool to mitigate risk.

The Basics of JPI

A plaintiff who has prevailed and obtained a judgment at the trial court level faces at least two significant obstacles to a timely collection of damages awarded: (i) the risk of reversal or reduction of the damage award on appeal; and (ii) the risk of lengthy delay in recovery due to the appellate process.