PROPERTY PROVISIONS & CONTRACT LAW · 5 MIN READ

Representations, Warranties, and Rescission

Statements made during underwriting are classified by their legal weight. A representation is a statement believed true to the best of the applicant's knowledge; it supports rescission only if false and material. A warranty is a statement or promise made part of the contract itself that must be strictly true or strictly performed. Warranties subdivide further: an affirmative warranty asserts a fact as of the time it is made, while a promissory warranty promises continuing conduct — for example, a marine warranty that a vessel will not navigate beyond stated trading limits. Traditional marine insurance, governed by uberrimae fidei (utmost good faith), enforces warranties with literal strictness: any breach suspends or voids coverage regardless of materiality. The held-covered clause is the standard escape valve — if the insured breaches a warranty honestly, gives prompt notice, and pays any additional premium the underwriters set for the changed risk, coverage continues. Rescission for material misrepresentation follows a four-element test: a false statement; materiality, meaning a reasonable insurer would have declined the risk, charged more, or imposed different terms; reliance by the insurer; and inducement to issue the policy on those terms. Critically, there is no requirement that the misrepresentation caused the particular loss being claimed — an applicant who concealed a prior kitchen fire can face rescission even when the presented claim is a theft. Concealment — the failure to disclose a material fact, including the half-truth that tells only the favorable part — supports the same remedy, and fraud differs from innocent misrepresentation mainly in the additional remedies and penalties it unlocks. Unlike life insurance, property forms carry no incontestability clause, so misrepresentation defenses do not expire with time. When a policy covers multiple insureds, the innocent co-insured doctrine and the severability-of-interests clause protect the blameless. Under the modern rule, an intentional-act exclusion is read severably: one spouse's arson does not automatically defeat the innocent spouse's claim to her separate interest — unless the policy is drafted with 'any insured' language that courts have upheld as defeating severability. The severability clause operates the same way on the liability side, applying exclusions and conditions as though each insured were the only insured, while leaving one shared set of limits: severability multiplies the analysis, never the money.