Basket Deductible

Meant to reduce transactional risk, basket deductibles are paid for losses accrued due to various types of risk.

Specifying the instances in which the seller in a transaction can be responsible for various claims, a basket deductible will limit the obligations of an indemnifying party so that they are not liable for breaches or mistakes in a transaction until a specified amount of losses are exceeded.

If a company undergoes an acquisition or merger, the basket deductible will typically be found in the purchase agreement. The presence of a basket deductible will make easier the merger or acquisition process by enumerating the various risks involved, and offering a certain level of insurance to the seller.