State RegulationsCA specific✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
Under California law, a warranty is a statement that becomes part of the insurance contract. When a warranty that is material to the risk is breached, the insurer may, under Insurance Code Section 447:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Section 447 provides that a breach of warranty is a defense to the insurer's liability if the warranty was material to the risk or contributed to the loss. Because a warranty is part of the contract, the insurer may rescind or avoid the policy when a material warranty is broken. This contrasts with a representation, which must be both false and material to support rescission.
Why the other options are wrong
- B) The statute gives the insurer a defense to liability; it does not provide a premium adjustment remedy.
- C) Fraud need not be proven; breach of a material warranty is itself a defense under Section 447.
- D) Extending coverage is the opposite of the statute's effect; a material breach defeats, not extends, liability.
Memory hook
Warranty = part of the contract; break a material one and the policy can be voided. Fraud is not required.