Breach of Warranty Can Cause a Policy to be Void

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A warranty in an insurance policy is a promise by an insured that a material fact is absolutely true. A breach of a warranty at the inception of a policy prevents the policy from attaching to the risk. Even if the court disagrees and finds no breach of warranty a good faith refusal to pay on the basis of breach of warranty will avoid a claim of unfair claims practices or bad faith.

If an insured breaches one or more material warranties and increases the risk covered by the policy, the contract may be voided by the insurer, depending on the jurisdiction. It is, therefore, essential that every claims investigation include efforts to establish compliance with every warranty.