How Representations and Warranties Works in Insurance

A representation is a statement made by the proposer to the insurer relating to a proposed risk. Such a representation may pertain to both material and immaterial facts.

If material, then the representation must be substantially true. Any false statement on the material portion of the fact would render the contract voidable.

A warranty on the other hand is an undertaking by the insured to the effect that he shall or shall not do a certain thing or that some conditions shall be fulfilled or whereby he affirms or negatives the existence of a particular state of affairs.

Warranties may be either express or implied. Express warranties are those, which are mentioned in the policies, e.g., warranted no smoking inside the premises.

Implied warranties are those, which would apply even though not mentioned in the policy, e.g., warranty of sea-worthiness in marine insurance.

Distinction Between Representations and Warranties in Insurance

It is necessary to understand the difference in between representation and warranty and in this regard making a mistake is quite likely.

Such a mistake would be indeed fatal particularly keeping in view that a breach of either warranty or representation would have a different bearing on the insurance contract.

The differences are:

  1. A representation is required to be substantially true, i.e., the material portion of the statement must be literally true even though the immaterial portion of the statement need not be true or correct. On the other hand a warranty must be strictly and literally complied with.
  2. With regard to representation, if the insurers want to avoid the contract on grounds of misrepresentation, it has to be proved by the insurers that the misrepresentation relates to a material fact. On the other hand, with regard to warranty any breach whether material or immaterial is enough for the insurers to avoid the contract.
  3. A representation does not appear in the policy, but a warranty must appear in the policy either expressly or by way of reference.