What is a warranty in insurance terminology?

In insurance terminology, a warranty refers to an absolutely true statement upon which the validity of the insurance policy depends. This means that the statements made in the warranty must be correct for the insurance contract to be enforceable. If a warranty is proven to be false or untrue, it can lead to the policy being voided or denied during claim processing.

Warranties are distinct from other types of statements or representations in insurance. Unlike optional clauses, which relate to specific provisions within a policy, or misrepresentations, which may have varying consequences depending on their nature or impact, a warranty holds a strict standard. The assertion must be accurate in every particular; otherwise, it jeopardizes the coverage. This is why warranties are significant in insurance contracts, ensuring the insured provides truthful information that the insurer relies upon to issue the policy or determine its terms.