How can you differentiate between a warranty and a representation ?

The differences between a representation and a warranty in insurance contracts are significant: Nature of Compliance: A representation , even when material, needs only to be substantially correct. A warranty must be strictly and literally complied with. Any deviation, however minor, can breach the contract. Materiality for Avoidance: Before a misrepresentation can be held to be sufficient to enable the insurer to avoid the contract, it must be shown to be material to the risk. With a warranty , any breach is sufficient to avoid the contract, whether it is material or not. Inclusion in Policy: A representation does not necessarily appear in the policy document itself. It is typically a statement made during the application process. A warranty must be incorporated into the policy, either expressly or by reference, to be legally binding as such. In essence, a warranty is a statement that is considered guaranteed to be true and, once declared, becomes an actual part of the contract. Typically, a breach of warranty provides sufficient grounds for the contract to be voided. Conversely, a representation is a statement that is believed to be true to the best of the other party's knowledge. In order to void a contract based on a misrepresentation, a party must prove that the information misrepresented is indeed material to the agreement. According to the laws of most states and in most circumstances, the responses that a person gives on an insurance application are considered to be a representation, and not warranties.