Representation

A warranty is a promise concerning the risk that may void the policy if breached; a representation is a statement of fact that is actionable only if false and material — A warranty is an insured's promise that a certain fact is true or will remain true for the life of the policy, for example, that a building will be protected by a sprinkler system. A breach of a material warranty may allow the insurer to rescind the policy, because the promise goes to the very basis of the risk. A representation, by contrast, is a statement of fact made to induce the insurer to enter the contract. If a representation turns out to be false, it is actionable only when it is both false and material, meaning the insurer relied on it in deciding to issue the policy or set the premium. In California law, breach of a material warranty can void the policy, while a false representation must meet the materiality and reliance standards to support rescission.

National insurance concept

A promise or statement that must be literally true, the breach of which allows the insurer to rescind — A warranty is an undertaking that certain facts exist or will continue to exist, and it is either express or implied under CIC Section 440. Violation of a material warranty or other material provision of a policy entitles the other party to rescind under CIC Section 447. Warranties must be literally true, in contrast to representations, which need only be substantially true. In life insurance, however, Section 10113 provides that statements made by the insured are, in the absence of fraud, representations rather than warranties, which protects insureds from the strict literal-truth standard that applies to warranties.

CA-specific example