In a warranty, what happens if the insured breaches the terms?

In the context of insurance, a warranty is a specific promise made by the insured regarding certain facts, representations, or conditions that are fundamental to the insurance agreement. If the insured breaches the terms of a warranty, this typically allows the insurer to deny coverage for claims related to that breach. The rationale is that warranties are considered an integral part of the insurance contract—essentially, they set the standards or conditions that must be met for the insurance policy to remain valid.

When a breach of warranty occurs, it undermines the risk assessment that the insurer made when underwriting the policy. As a result, the insurer is often justified in denying coverage because the original terms of the agreement were not adhered to. This is in contrast to mere representations or statements made by the insured, which typically do not carry the same binding weight as a warranty.

Other options do not accurately reflect the implications of breaching a warranty. Denying coverage is a significant consequence for breaches, emphasizing the strict nature of warranties in an insurance contract.