Representations and warranties insurance (RWI) policies insure loss arising out of the seller's breach of a covered representation and warranty in the purchase agreement. They typically provide coverage for amounts by which the buyer overpaid for the acquired company as a result of a breach of a representation or warranty in the purchase agreement, and for potential liability to third parties arising out of a breach, such as through litigation or even a government investigation. Most RWI policies are heavily negotiated agreements between sophisticated parties: the purchaser of a target company and the insurance company. Among the provisions that RWI policyholders should carefully scrutinize and negotiate with a clear sense of their needs and potential pitfalls are the mandatory alternative dispute (ADR) provisions in their policies.