Mississippi Property & Casualty Practice Exam

Which statement is true regarding warranties in insurance?

1. They are subject to change by the insurer

2. They must be part of the application

3. They must always be true as stated

4. They can be ignored if the insured is eligible

The correct answer is: They must always be true as stated

Warranties in insurance are statements or promises that certain facts or conditions are true at the time the insurance policy is created and must remain true for the policy to be valid. The correct answer states that warranties must always be true as stated, which reflects the legal obligation of the insured to uphold these assertions. If a warranty is found to be untrue, the insurer has the right to void the policy or deny a claim, as the warranty serves as a foundational aspect of the contract. In this context, the other statements do not accurately depict the nature of warranties. While an insurer may have discretion over some policy terms, warranties are typically fixed and must be adhered to strictly. They do not necessarily have to be included in the application process as they can be part of the policy agreement itself. Finally, warranties cannot be disregarded simply because the insured meets eligibility criteria; adherence to a warranty is essential regardless of the insured's status. This rigid expectation underscores the importance of warranties in maintaining the integrity of the insurance contract.