The Fine Print: Understanding Insurance Warranties And Their Implications

In insurance terms, a warranty is a promise or guarantee made by the insured party that statements affecting the validity of the contract are true. In other words, it is a form of assurance provided by one party to another that specific facts or conditions are true or will occur. Most insurance contracts require the insured to make certain warranties, such as warranting that they do not have a terminal disease when obtaining a health insurance policy. If a warranty made by the insured party is found to be untrue, the insurer may cancel the policy and refuse to cover any claims.

A warranty is a guarantee of the performance of a product or work

For example, a warranty may be that a product is free from material defects in materials and workmanship. This is a promise that the manufacturer has constructed the product properly, out of suitable materials, and that it is not defective for the purposes for which it was made. Warranties can also cover the quality of a product, but the manufacturer may have no direct contractual relationship with the consumer.

Warranties can be express or implied. An express warranty is expressly stated, usually in writing, and is a guarantee from the seller to the buyer that the product performs according to certain specifications. If defects are present, the seller agrees to repair or replace the product. An implied warranty is an unwritten promise that arises from the nature of the transaction and the inherent understanding of the buyer.

Warranties are legally binding and can be enforced if breached, with remedies including damages or a refund/replacement from the seller. They are not the same as guarantees, which are assurances from the seller that the product will meet certain quality and performance standards. A warranty describes the conditions under which the seller is liable and what conditions are excluded.

In insurance contracts, warranties can be divided into two types: affirmative or promissory. An affirmative warranty is a statement of fact at the time the contract is made, while a promissory warranty is a statement about future facts or facts that will continue to be true throughout the policy. If an affirmative warranty is untrue, the insurance contract is void, whereas if a promissory warranty becomes untrue, the insurer may cancel coverage at that time.

Warranties can be either expressed or implied

In insurance terms, a warranty is a promise by the purchaser about the thing or person to be insured. In other words, it is a guarantee or assurance that certain facts or conditions are true.

On the other hand, an implied warranty is a guarantee that is not written down or explicitly spoken. It is an unwritten promise that arises from the nature of the transaction and the inherent understanding of the buyer. For instance, a vacuum cleaner that does not have enough suction power to clean an average floor is in breach of the implied warranty of merchantability.

Both types of warranties are legally binding.

A warranty is not a guarantee, it is a promise

In insurance, a warranty is a promise or assurance made by the insured party that statements affecting the validity of the contract are true. It is not a guarantee but a mere promise that can be enforced if breached, typically through an award of damages.

Warranties are generally required in insurance contracts and can be divided into two types: affirmative and promissory. An affirmative warranty is a statement regarding facts at the time the contract was made, while a promissory warranty concerns future facts or facts that will remain true throughout the policy's duration. For instance, to obtain health insurance, an insured party may need to warrant that they do not have a terminal illness. If this warranty is untrue, the insurer may cancel the policy and refuse to cover claims.

In contract law, a warranty is a guarantee or promise that provides assurance to another party about specific facts or conditions. It is not a condition of the contract or an unnamed term. Instead, it is a term that does not go to the root of the contract. This means that if the warranty is breached, the innocent party is entitled to damages but the contract itself remains valid.

Warranties can be express or implied. An express warranty is explicitly stated, typically in writing, while an implied warranty arises from the nature of the transaction and the inherent understanding of the buyer. For example, a warranty of merchantability is implied unless expressly disclaimed, and it ensures that goods reasonably conform to a buyer's ordinary expectations.

Warranties are distinct from indemnities, which allocate risk regarding a known liability. Warranties are contractual statements of fact, whereas indemnities are promises to reimburse the claimant for losses suffered.

Affirmative and promissory warranties

A warranty is a guarantee or promise that provides assurance to one party by another party that specific facts or conditions are true or will happen. In insurance, warranties are a type of insurance policy that serves the purpose of guaranteeing to both parties that the item is of the stated quality before it is insured.

A promissory warranty, on the other hand, is a statement about future facts or about facts that will continue to be true throughout the term of the policy. It is a promise that certain conditions will be met during the term of the policy. For example, if an insured party warrants that property to be covered by a fire insurance policy will never be used for the mixing of explosives, the insurer may cancel the policy if the insured party decides to start mixing explosives on the property.

Both affirmative and promissory warranties are important in ensuring that insurers can effectively manage their risks. It is crucial for policyholders to understand the limitations and potential consequences of breaching the policy terms.

Warranties can be statutory

A warranty is a legally binding commitment that forms part of a sales contract, assuring the buyer that the product or service is free from defects. In insurance law, it refers to a promise by the purchaser of an insurance policy about the thing or person to be insured.

Warranties can be express or implied, and they can also be statutory, which means they are imposed by law and cannot be disclaimed or excluded. In some cases, the seller of a particular commodity or property expressly guarantees the quality of the product purchased. In certain situations, the law implies a warranty where no express warranty was made. Both provide legal relief for the purchaser.

Statutory warranties are mandated by state or federal law and are often designed to reduce seller fraud. For example, in some states, a seller is legally required to extend warranties for passenger cars. These warranties ensure that consumers are not charged when car repairs are needed to reduce vehicular emissions below regulatory limits.

In the United States, various laws apply, including provisions in the Uniform Commercial Code, which provide for implied warranties. The Magnuson-Moss Warranty Act, passed in 1975, also strengthens warranties on consumer goods. This Act requires sellers and manufacturers of consumer goods to clearly delineate the bounds of express warranties and to expressly state the requirements for maintaining warranty coverage.

In Saskatchewan, consumer goods or services come with statutory warranties that guarantee the seller has the right to sell the goods and that the consumer will enjoy uninterrupted possession of them. Consumer products are also guaranteed to be free of any security interest or liens that are not made known to the consumer before the sale.

In Poland, the statutory warranty is an entitlement originating directly from the Polish Civil Code and is regulated therein. It is effective from the moment of the execution of a contract and defines the set of entitlements of a buyer in the event that the goods are defective.

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