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Transactional Gap Insurance For Companies


Buyers and sellers can purchase transactional gap insurance to protect themselves during the sale or purchase of a company. What gets indemnified (secure against legal liability or require compensation for harm or loss), how long the seller is responsible and establishing the limit of what can be recovered can take a long time to determine.

Gallant Risk & Insurance Services, Inc., offers transactional gap insurance coverage to put companies at ease during the negotiations for a merger or acquisition deal. Transactional gap insurance can address risks that may prevent the closing of a sale—on the buyer’s or seller’s side—by transferring potential liabilities. We utilize the following:

  • Loss portfolio transfer
  • Representations (reps) and warranties (R&W) coverage
  • Tax opinion liability coverage
  • Transactional environmental liability

What Does the Coverage Provide?

Transactional insurance can contain various products, including representations and warranties, tax liability, pollution and contingent liability. Your customized policy can include any or all of these options, depending on your needs.

Bridging the Gap

Transactional gap insurance can make clarifications during a bid and help build a bridge between seller and buyer. As a seller, indemnities and survival periods should be minimized, while buyers should maximize their escrow to extend the representation period. Transactional gap insurance is designed to meet in the middle between both parties and protect the insured.

Representations and Warranties

This policy is designed to help protect from financial loss during the buying and selling process in the event of a contract breach or faulty representation. Information, warranties and statements make guarantees that need to be upheld. With a representation and warranty policy in place, the asset purchase agreement or sales and purchase agreement is protected.

Tax Liability

Transactional gap insurance can make clarifications during a bid and help build a bridge between seller and buyer. As a seller, indemnities and survival periods should be minimized, while buyers should maximize their escrow to extend the representation period. Transactional gap insurance is designed to meet in the middle between both parties and protect the insured.

Contingent Liability

Problems can arise during closing, which can lead to a potential financial loss for the buyer. Litigation requires a valuation of the risks involved, which is covered by contingent liability.

Protect Your Financial Investment

When issues arise during a transaction, neither the buyer nor the seller will want to be responsible. For every deal, a buyer can purchase coverage for potential risks involved with acquiring a new company.

Conversely, sellers typically want to receive payment and be rid of the company. These negotiations can result in a lengthy argument and sometimes involve expensive lawyers and courtroom debates. Prevent these headaches when purchasing or selling a business with a transactional gap insurance plan.

Gallant Puts Customers First

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