A warranty in an insurance contract differs from a representation primarily because a warranty:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
A warranty is a statement or condition that becomes part of the insurance contract and must be literally true. Under California law a warranty may be express or implied, and the violation of a material warranty entitles the injured party to rescind the policy. Because a warranty is incorporated into the contract, its falsity breaches the contract itself. This is the central distinction from a representation, which is a statement made to induce the contract, is not part of the contract, and generally must merely be substantially true and material before it gives rise to rescission.
Why the other options are wrong
- B) The 'substantially true' and pre-contract description applies to representations, not warranties; warranties must be strictly true and become part of the contract.
- C) Warranties are typically made by the insured about the risk; the insurer does not make warranties about the insured's conduct.
- D) A warranty may be either express or implied, so saying it cannot be either is incorrect.
Memory hook
Warranty = part of the contract, must be literally true. Representation = pre-contract talk, must be substantially true.