Every answer and its explanation appears here once you have finished the path. Each one then links to the matching glossary entry, where the concept is set out in full with its worked example.
1. What exactly is the uncertainty insured by a tax liability policy?
The legal conclusion drawn from facts everyone knows: it is not an uncertainty about what happened
That is the module's reversal and it governs everything else: the facts are on the table, in the data room and with the authorities alike, and what the parties do not know is what conclusion will be drawn from them. A warranty policy covers the unknown, and an identified tax position is known by definition and falls outside it: it is another product and not an extension. The answer aiming at the facts describes what a warranty policy covers, which is exactly the filing error the module closes. The one aiming at solvency shifts toward credit risk a policy that underwrites a legal argument.
Glossary entry →2. Two tax advisers disagree, each sincerely convinced it is right, and the deal is stuck. What does the policy do?
It turns a disagreement about a probability into a premium, unblocking the deal without anyone having to concede on the merits
The product's usefulness lies in asking nobody to be wrong: each side keeps its analysis, and the disagreement is settled by a price. That is why it unblocks deals where the legal argument itself would not move an inch. Believing the insurer adjudicates between the two opinions credits it with an arbitrator's role it does not have: it underwrites a position, which is not the same as declaring it correct. And shifting the burden onto the seller describes the solution one was trying to avoid, since that is what was blocking.
Glossary entry →3. Between the policy limit and the definition of the insured position, which deserves more attention, and why?
The definition: the authorities are not bound by the basis the adviser anticipated, and a reassessment obtained on another basis can fall outside the insured position
You insure a position, that is, a precisely described line of reasoning, and not a tax subject in general: if the authorities attack elsewhere, the policy may owe nothing even though the reassessed amount sits well within the limit. It is this product's costliest defect and it does not show up by reading the numbers. The answer favoring the limit is the one produced by the habit of property policies, where the perimeter is more stable; here the definition makes the perimeter, and it is negotiated wider rather than higher.
Glossary entry →4. The authorities open an audit. The insured wants to settle quickly for commercial reasons. What is the risk?
The insurer pays for a line of reasoning it underwrote and whose defense it approves: settling alone can forfeit the cover
The insurer did not underwrite an amount, it underwrote a position, and defending it is what it bought: abandoning that defense to preserve a commercial relationship with the authorities removes the very object of its cover. The answer welcoming it reasons in cash terms, which is true of a property policy and false here. Nothing forbids settling, provided the insured does not do so alone, and that is prepared in the conduct-of-proceedings clause rather than at the moment the authorities propose a figure.
Glossary entry →5. On one target there appear an unknown liability, a defensible tax position and a pending dispute. How many policies, and why?
Three distinct products, because each insures a different degree of uncertainty: the unknown, a legal conclusion on known facts, and a disputed outcome
The sorting is done on what is known, and not on the amount or the nature of the subject: as soon as an exposure is identified, it has left the domain of the warranty policy, which covers uncertainty. The answers speaking of an extension describe the step buyers most often ask for and underwriters most often refuse, for a reason of principle and not of appetite. As for an obligation to place with a single insurer, none exists: these three products are placed separately, and that is exactly why their interplay needs checking.
Glossary entry →