What happens if a warranty in an insurance policy is found to be untrue?

When a warranty in an insurance policy is found to be untrue, the implication is significant for the validity of the insurance contract. A warranty is a statement or promise made by the insured that certain facts are true throughout the life of the policy. If it is discovered that the warranty is not true, it can lead to serious consequences regarding the enforceability of the contract.

The ability to cancel the policy arises because warranties are considered crucial to the risk assessment conducted by the insurer when underwriting the policy. If a warranty is breached—meaning the information provided was untrue—the insurer may view this as a fundamental misrepresentation. As a result, they are typically allowed to cancel the policy since the breached warranty affected their decision to issue the policy and the terms under which it was issued.

This process emphasizes the importance of transparency and accuracy when providing information to the insurer, as the failure to do so can result in the invalidation of coverage. Thus, the correct outcome when a warranty is found to be untrue is that the contract can indeed be canceled.