What BEST describes a Warranty in insurance?

What BEST describes a Warranty in insurance?

• A. A statement that is true only at application
• B. A statement guaranteed to be true
• C. A promise that must be fulfilled
• D. A general assumption about the policyholder

Answer: (B)

A warranty in insurance is best described as a statement that is guaranteed to be true. This means that the insurer relies on this representation as a condition of the contract. If a warranty proves to be untrue, it can lead to a loss of coverage or a denial of a claim, as the insured has made a binding statement that their information or circumstances are accurate at all times throughout the policy period. Warranties differ from mere representations, which are statements made that are true to the best of the person's knowledge at the time. The key aspect that sets warranties apart is that they must remain true indefinitely. This requirement places a stringent obligation on the insured, making warranty statements critical elements in the underwriting process and the validity of the insurance contract. In this context, describing a warranty as a guaranteed truth captures its binding legal significance in the realm of insurance contracts.

A warranty in insurance is best described as a statement that is guaranteed to be true. This means that the insurer relies on this representation as a condition of the contract. If a warranty proves to be untrue, it can lead to a loss of coverage or a denial of a claim, as the insured has made a binding statement that their information or circumstances are accurate at all times throughout the policy period.

Warranties differ from mere representations, which are statements made that are true to the best of the person's knowledge at the time. The key aspect that sets warranties apart is that they must remain true indefinitely. This requirement places a stringent obligation on the insured, making warranty statements critical elements in the underwriting process and the validity of the insurance contract. In this context, describing a warranty as a guaranteed truth captures its binding legal significance in the realm of insurance contracts.