Under California Insurance Code Section 354, a representation made by the insured:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Section 354 of the California Insurance Code provides that a representation may be used to qualify an implied warranty, but it cannot be used to restrict or limit an express warranty contained in the policy. Because express warranties are written directly into the contract, they prevail over any earlier representation that might conflict with them. The rule preserves the stability of the written policy: an insured may clarify the intent behind implied obligations, but cannot rewrite or soften an express warranty after the fact through an earlier statement. This reflects the broader principle that the written policy governs and that express terms are entitled to greater weight than implied ones. Understanding this hierarchy of warranty and representation is essential to analyzing application and policy disputes.
Why the other options are wrong
- B) Section 354 expressly forbids using a representation to restrict or limit an express warranty. Only implied warranties may be qualified by a representation; an express warranty written into the policy cannot be softened or overridden by an earlier statement made by the insured.
- C) A representation explains or qualifies statements made about the risk; it cannot create coverage that the policy never provided. Coverage is created by the policy's terms, and a representation cannot add new coverage any more than it can restrict an express warranty.
- D) The obligation to pay premiums is fixed by the terms of the policy and cannot be waived by a representation concerning the risk. A representation speaks to facts about the risk being insured, not to the financial terms such as premium payment obligations.
Memory hook
Representations bend implied warranties but never break express ones.