What is a warranty in an insurance contract?

• A. An absolutely true statement upon which the validity of the policy depends
• B. A promise to pay future premiums
• C. A statement required for underwriting only
• D. A guarantee of the policy's renewal

Answer: (A)

A warranty is a statement in the insurance contract that the insured guarantees to be true, and the insurer treats that truth as a condition of the policy. The contract’s validity relies on this statement being true, so if a warranty is breached, the insurer may void the policy or deny a claim. This is different from representations, which are statements made to obtain coverage but aren’t guaranteed to be true; the insurer can still issue the policy based on those statements, though misrepresentations can affect coverage or eligibility. The option described as an absolutely true statement upon which the policy’s validity depends captures exactly this idea. The other options describe separate concepts: a promise to pay premiums is a payment obligation, not a warranty; a statement for underwriting is a representation; a renewal guarantee is a policy feature, not a warranty.