Which of the following is an example of a warranty?

Which of the following is an example of a warranty?

• A. Loss Ratio
• B. Implied Warranty
• C. Replacement Cost
• D. Subrogation Clause

Answer: (B)

A warranty in the context of insurance is a specific promise or guarantee made by the insured regarding certain conditions or facts related to the policy. An implied warranty refers to an unstated guarantee that certain conditions will be met, which is often assumed in transactions unless explicitly stated otherwise. This concept plays a crucial role in the validity of the policy; if the conditions of the warranty are not upheld, it may result in the denial of a claim. For instance, if an implied warranty states that a property will be maintained in a certain condition, failure to do so could jeopardize coverage. The other options do not function as warranties. For instance, a loss ratio is a statistical measure that compares claims paid to premiums earned, which is more of a performance metric than a guarantee. Replacement cost refers to the amount needed to replace or repair an item without considering depreciation, and while it’s a critical concept in insurance, it doesn’t imply a promise. A subrogation clause, on the other hand, details the insurer's right to pursue recovery from a third party responsible for a loss after compensating the insured. It does not serve as a warranty but as a procedural element of the insurance contract. Thus, the choice of an implied warranty accurately reflects a fundamental

A warranty in the context of insurance is a specific promise or guarantee made by the insured regarding certain conditions or facts related to the policy. An implied warranty refers to an unstated guarantee that certain conditions will be met, which is often assumed in transactions unless explicitly stated otherwise.

This concept plays a crucial role in the validity of the policy; if the conditions of the warranty are not upheld, it may result in the denial of a claim. For instance, if an implied warranty states that a property will be maintained in a certain condition, failure to do so could jeopardize coverage.

The other options do not function as warranties. For instance, a loss ratio is a statistical measure that compares claims paid to premiums earned, which is more of a performance metric than a guarantee. Replacement cost refers to the amount needed to replace or repair an item without considering depreciation, and while it’s a critical concept in insurance, it doesn’t imply a promise. A subrogation clause, on the other hand, details the insurer's right to pursue recovery from a third party responsible for a loss after compensating the insured. It does not serve as a warranty but as a procedural element of the insurance contract. Thus, the choice of an implied warranty accurately reflects a fundamental