We employ, and build on, neo-institutional theory and strategic entrepreneurship thinking to explain the growing use of representations and warranty ("reps") insurance (RWI), an innovative product that mitigates the risks (costs) of legal disputes when private equity is involved on both the buy side and sell side of strategic transactions. Our analysis suggests that transaction risks and uncertainties motivate managers of private equity-sponsored leveraged buyouts and liability insurers to cooperate and change the "rules of the game" using creative customized contracts. The transformation of embedded institutional logics enables contracting parties not only to realize gains from collaboration but also from concessions that radically alter custom and practice. Our analysis suggests that the use of RWI in private equity transactions is both a determinant and consequence of institutional change in financial markets. We conclude that the private equity-RWI relation is a classic case of experimental institutionalism in action.