Survival period

The period, in a sale agreement, during which the seller remains liable for its representations and warranties.

Definition

The survival period sets how long the buyer can go after the seller under the representations and warranties of the sale agreement. Set against warranty and indemnity insurance, it leaves a gaping hole. The typical policy runs three years. Yet 93% of deals extinguish the seller's warranty before twenty-four months, while nearly half of claims arise after month twelve. The policy is what shortened survival periods: the parties allowed themselves a gap they knew was covered. So the insurer alone carries a class of claims the contractual regime would have absorbed.

Its 3 cross-references, woven across the glossary's 18 categories

Survival period: Finance glossary illustration, AlgoPolis

Example

Textbook case: the policy runs three years, but the sale agreement extinguishes the seller's warranty after eighteen months, while part of the claims only surface after the buyer's first closed financial year.

Read next

Special risksRepresentations and warranties insurance (RWI)Policy covering losses from the inaccuracy of representations and warranties given in a company acquisition.Read the entry →Actuarial scienceAdverse selectionInsureds who know they are the riskiest buy more cover, and the pool deteriorates without the insurer being able to tell them from the rest.Read the entry →MarketsLife settlement marketA policyholder sells a life policy to an investor, who pays the premiums and collects the benefit. The market rests on one principle: the policy is transferable property.Read the entry →

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