Warranties in Insurance

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What constitutes a warranty – A warranty is either express or implied.[1] It may relate to the past, the present, the future, or to any or all of these.[2] To create a warranty, there is no particular form of words that are necessary to be used.[3]

What constitutes an express warranty – An express warranty is a statement in a policy “of a matter relating to the person or thing insured, or to the risk, as fact.”[4] For instance, a statement in a policy that imparts what is intended to do or not to do a thing which materially affects the risk is a warranty that such act or omission is to take place.[5]

Express warranty to be stated in policy itself or in another instrument signed by insured and referred to in policy as making part of it – Without prejudice to those required to be stated in the policy, every express warranty, which was made at/before the execution of a policy, is required to be contained in the policy itself, or in another instrument signed by the insured and referred to in the policy as making a part of it.[6]

Omission to fulfill warranty does not avoid policy – The omission to fulfill the warranty relating to the future before the time arrives for the performance of such warranty does not avoid the policy in these cases: (a) when loss insured against happens, or (b) performance becomes unlawful at the place of the contract, or impossible.[7]

Rescission in case of material warranty – Either party is entitled to rescission in case the other violates a material warranty or other material provision of a policy.[8]

Policy may declare violation of specified provisions results in nullity of insurance contract – The insurer may declare in the policy that a violation of specified provisions thereof results in the contract being void; otherwise, the breach of an immaterial provision does not nullify the policy.[9]

Breach of warranty without fraud – The breach of warranty without fraud results in the following: (a) it merely exonerates an insurer from the time that it occurs; or (b) where it is broken in its inception, prevents the policy from attaching to the risk.[10]

[1] P.D. 612 (Insurance Code), as amended, Section 67.

[2] Ibid. Section 68.

[3] Ibid. Section 69.

[4] Ibid. Section 71.

[5] Ibid. Section 72.

[6] Ibid. Section 70.

[7] Ibid. Section 73.

[8] Ibid. Section 74.

[9] Ibid. Section 75.

[10] Ibid. Section 76.

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