Which choice describes the core principle of a warranty in an insurance policy?

The core principle of a warranty in an insurance policy is that it guarantees that statements made by the applicant are true. In the context of insurance, warranties are definitive statements or promises about certain facts that are relevant to the risk being insured. When an applicant makes a warranty, they are affirming that specific information is accurate and true at the time the policy is in effect. This obligation is critical because any breach of the warranty can lead to the insurer denying coverage or voiding the policy altogether.

For example, if an individual warrants that they have never had a certain health condition when applying for life insurance, this statement must be true. If it later turns out that they had the condition and did not disclose it, the insurance company may not be liable to pay benefits due to the breach of the warranty.

This differentiates warranties from other statements like representations, which are statements made by the applicant that are believed to be true but can be subject to change and may allow more leniency for mistakes or misstatements without necessarily voiding the policy. The essence of a warranty is its strictness and the binding nature of its accuracy, which is why it is foundational in underwriting and risk assessment in insurance.