What is the correct definition of a warranty in insurance?

In the context of insurance, a warranty is defined as an assertion that must be absolutely true. This means that if a warranty is included in an insurance policy, the insured is required to adhere to its terms exactly as stated. If a warranty is found to be untrue, even if the inaccuracy does not contribute to a loss or claim, it can invalidate the insurance contract. This absolute requirement distinguishes warranties from other types of statements or promises in insurance, which may not require strict adherence.

Understanding the nature of warranties is crucial because they serve to ensure that the insured party carries out specific actions or maintains particular conditions, thereby reducing the insurer's risk. The rigorous nature of warranties highlights their importance in the underwriting process, as they provide a level of certainty to the insurer regarding the risk they are covering.