For understanding warranties ‘Representations’ are to be thoroughly understood because in life insurance those representations which are embodied in the policy and expressly or implicitly forming part of the basis of the contract, are called warranties.
Every information given by a proposer for insurance to the insurer during the negotiations is a representation.
The representations may be material or non-material. The material representations are the basis of the insurance contract as has been clear in the utmost good faith under material facts.
If the proposer’s representation is false or untrue, the contract may be voidable at the option of the insurer. The representations made during the negotiations do not form an integral part of the contract.
Warranties are integral parts of the contract, i.e., these are the bases of the contract between the proposer and insurer and if arty statement, whether material or non-material, is untrue the contract shall be null and void and the premium paid by him may be forfeited by the insurer.
The policy issued will contain that the proposal and personal statement shall form part of the policy and be the basis of the contract.
So that representation will be warranty. As has been disclosed already that the warranties may be informative, and promissory.
In Life Insurance, the informative warranties are more important. The proposer is expected to disclose all the material facts to the best of his knowledge and belief.
Warranties relating to the future may only be statements about his expectation or intention, for instance, the proposer promises that the will not take up any hazardous occupation and will inform the insurer if he will take the hazardous occupation.
Breach of Warranty
If there is a breach of warranty, the insurer is not bound to perform his part of the contract unless he chooses to ignore the breach.
The effect of a breach of warranty is to render the contract voidable at the option of the other party provided there is no element of fraud. In case of fraudulent representation or promise, the contract will be void “ab initio”.