Insurance Broker Certification Practice Exam

In insurance, what is a promise made by the insured that is a crucial part of the insurance contract?

1. Representation

2. Warranty

3. Promise

4. Contract provision

The correct answer is: Warranty

In the context of an insurance contract, a warranty serves as a critical promise made by the insured. A warranty is a specific type of promise or guarantee that certain conditions will be met or that specific facts are accurate. It is a statement that must be true and maintained throughout the life of the contract, and it plays a significant role in determining the validity of the policy. If a warranty is found to be untrue or not met, the insurer has the right to deny a claim or void the policy altogether. This strict adherence distinguishes warranties from representations, which are statements made by the insured that are believed to be true but are not legally binding in the same way. The implication of warranties is that they offer insurers assurance regarding the risk they are covering, making it essential for both parties to the contract. This understanding is crucial for anyone preparing for the insurance broker certification, as it emphasizes the importance of accuracy and honesty in providing information to the insurer.