State RegulationsCA specific✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
Under California law, if an insured violates a material warranty or other material provision of the policy:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
CIC Section 447 provides that the violation of a material warranty or other material provision of a policy, by either party, entitles the other party to rescind. A warranty is a promise or statement of fact that the policy requires to be true; warranties may be express or implied (Section 440). Rescission unwinds the contract as if it had never existed, subject to the materiality requirement.
Why the other options are wrong
- B) There is no automatic reinstatement after a material breach; the innocent party gains a right to rescind.
- C) Forfeiting dividends is not the remedy; the remedy is rescission of the entire contract.
- D) Premium increases are a rating action, not a statutory remedy for breach of a material warranty.
Memory hook
Break a material warranty and the other side can tear up the contract (rescind).