West Virginia Property and Casualty Licensing Practice Exam

What is best described as a guarantee in insurance regarding the applicant's statements?

1. A concise summary of coverage

2. Disclosure of previous claims

3. A warranty

4. An endorsement

The correct answer is: A warranty

A warranty in the context of insurance is a promise made by the applicant that certain statements are true. It guarantees that specific conditions or facts are accurate, which is essential for the underwriting process. For example, if an applicant states that a property has a working smoke detector, this statement becomes a warranty if the insurance policy confirms it as such. If it turns out that the warranty is untrue, the insurer may have the right to deny a claim or void the policy altogether. The other options do not function as guarantees in the same manner. A summary of coverage provides an overview of what is covered under a policy but does not require any assurances about the truthfulness of the applicant's statements. Disclosure of previous claims is a process of revealing past information, but it does not serve as a guarantee of accuracy regarding the details entered into the application. An endorsement modifies the original insurance policy by adding or changing coverage but does not serve as a guarantee about the statements made by the applicant. This distinction clarifies why a warranty is the correct answer.