Tennessee Insurance Practice Exam

Which of the following BEST describes a warranty in an insurance contract?

1. A statement subject to verification

2. A statement guaranteed to be true

3. A general assumption in the policy

4. A requirement that can be waived

The correct answer is: A statement guaranteed to be true

A warranty in an insurance contract is best described as a statement guaranteed to be true. This means that the policyholder must ensure that the information provided in the warranty is accurate and factual. If the warranty is found to be false or misleading, it could potentially lead to the denial of a claim or the cancellation of the policy. Warranties are typically viewed as essential components of the contract, as they form the basis on which the insurance coverage is agreed upon. In contrast, a statement subject to verification refers more to representations, which are assertions made by the insured that are believed to be true but do not carry the same binding implications as warranties. General assumptions in policies and requirements that can be waived do not embody the strict nature of what a warranty entails; warranties are absolute guarantees rather than suggestions or optional clauses.