The explosive growth of representation and warranty (R&W) insurance over the past decade is no secret. But for many, R&W policies remain a mystery, especially when it comes to filing a claim under such policies. In fact, even those involved in purchasing R&W insurance may not have experience on the claims side and, as a result, have little knowledge of how to navigate the range of issues that can arise. Of course, policyholders pursuing claims under an R&W policy should be aware of the minefield of issues that await in determining the two primary thresholds for recovery: breach and loss. For example, insurers will review whether a breach of a representation has occurred, often requiring a hyper-technical showing of breach that may not be consistent with policyholders̵7; views. Likewise, quantifying the loss resulting from the breach is rarely straightforward and often a source of dispute between insurers and policyholders, particularly as it relates to 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 basics of R&W insurance that can be a useful resource for those looking to learn more about R&W insurance and in particular the various questions that may arise during the application. The note explains the R&W insurance product and the underwriting process. It then provides a detailed description of the claims process and identifies common areas of dispute in determining infringement and loss. A copy of the note is available here.