Warranties: The Promises You Must Keep

Warranties in insurance policies are more stringent than conditions; they are ongoing promises that you agree to uphold for the duration of the policy. These can require you to maintain certain standards or continuously take specific actions.

For example, a fire insurance policy might include a warranty that requires the insured property to remain occupied. If the building is left vacant for longer than the specified period, the policy could be voided—even if no fire occurs. Breaching a warranty can have dire consequences, including the insurer voiding the policy from the date of the breach. This means you could lose all coverage, and any subsequent claims—even after the breach is corrected—might not be paid.

How Exclusions, Conditions, and Warranties Work Together

Understanding how exclusion clauses, conditions, and warranties interact is vital. A claim can be denied not just because of an exclusion clause but also due to a condition precedent or a breached warranty. Conversely, fulfilling all conditions and warranties will not help if the loss results from something explicitly excluded by the policy.

To navigate these complexities, it is wise to review your policy with your insurance broker or provider. Understanding exactly what your policy covers—and what it does not—can save you from unexpected pitfalls.

Conclusion

Exclusions, conditions, and warranties are the foundation of any insurance policy. Understanding them is key to ensuring you are properly protected and that your coverage is effective when you need it most. For insurers, these elements help manage risk and provide coverage on fair terms. By mastering these aspects, both policyholders and insurers can foster a more effective and dispute-free insurance relationship.

Authored by Kunda Katumbo – Facultative and Treaty Underwriter