Which statement about warranties is true?

Which statement about warranties is true?

• A. Warranty guarantees something is true and will remain true
• B. Warranty is weaker than a representation
• C. A warranty has no impact on claim payments
• D. A warranty is the same as rescission

Answer: (A)

Warranties in insurance are promises about facts that must stay true for the policy to be in effect. Because a warranty is a true, continuing promise, breaching it gives the insurer a stronger remedy than a simple misstatement—typically the right to void the policy or to deny a claim. That’s why the statement that a warranty guarantees something is true and remains true is correct. Representations are statements used to obtain the contract and are not guarantees; misrepresentations can affect the contract but don’t carry the same binding effect as a warranty. The idea that a warranty has no impact on claim payments is false; breaching a warranty can affect coverage and payments. And while a warranty could lead to rescission, the two are not the same thing.

Warranties in insurance are promises about facts that must stay true for the policy to be in effect. Because a warranty is a true, continuing promise, breaching it gives the insurer a stronger remedy than a simple misstatement—typically the right to void the policy or to deny a claim. That’s why the statement that a warranty guarantees something is true and remains true is correct. Representations are statements used to obtain the contract and are not guarantees; misrepresentations can affect the contract but don’t carry the same binding effect as a warranty. The idea that a warranty has no impact on claim payments is false; breaching a warranty can affect coverage and payments. And while a warranty could lead to rescission, the two are not the same thing.