In an insurance contract, a 'warranty' is best described as:
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Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
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.
Why the other options are wrong
- B) Substantial truth is the standard applied to representations. A warranty must be literally true, so the two standards differ significantly. This statement does not survive the statutory analysis presented above and is therefore wrong.
- C) An opinion is a matter of the applicant's belief or personal judgment, not an assurance that a fact exists. Warranties concern facts, not opinions. The correct answer follows from the controlling authority, which this option does not follow.
- A) A warranty is an assurance of fact made by one party, not a request directed to the insurer. It defines the risk rather than asking for action. This common misconception is exactly what the governing rule rejects, so the option is incorrect.
Memory hook
Warranty = warrant, literally true, breach rescinds. In life insurance, statements are representations unless fraud shows.