What does a warranty in insurance ensure?

A warranty in insurance is a statement that is guaranteed to be true. This means that the insurer relies on the accuracy of the statements made in the warranty; if the warranty proves to be untrue, it can lead to the denial of a claim or the cancellation of the policy. Warranties differ from representations, which may be intended as true but are not guaranteed. A warranty is binding and creates an obligation for the policyholder to maintain the truth of the warranty throughout the life of the policy.

Understanding what constitutes a warranty is fundamental in insurance contracts because it sets a higher standard of truthfulness and reliability than other statements made within the policy. In contrast, a statement that may be true or one that can change during the policy term does not align with the stringent requirements of a warranty. Furthermore, guarantees of conditions being met align more closely with the overall terms of a contract rather than specifically defining a warranty.