Representations and Warranties in Insurance

(a) Representation

Every information given by a proposer for insurance to the insurer during the negotiation is a representation. A representation may be a representation as to a matter of fact, expectation or belief. If made as to a matter of fact, it is true if substantially correct. If made as to a matter of expectation or belief, it is true if made in good faith.’ Representations include either written or verbal statements made by the proposer in connection with the proposal or the medical examination.

The proposer’s answers to the various questions in the proposal and personal statement are all representations on the strength of which it may induce the insurer to enter the contract. Representation, if any made after we conclude the contract cannot have any connection with inducing the insurer to enter the contract and will not affect the validity of the contract.

The general rules are:

(a)  If a statement is material to the risk and untrue and fraudulent, the contract is void.

(b)  If a statement is material to the risk and untrue, but with ‘no fraudulent intent, the contract is voidable at the option of the assurance.

(b) Warranty:

We construe the answers to the questions in the proposal form as representation unless both parties intent to treat them as warranties. Section 33 of the Marine Insurance Act, 1906, defines a warranty as a statement by which the assured undertakes that some particular thing:

(i) shall or shall not be done or

(ii) that some condition shall be fulfilled or

(iii) whereby he affirms or negatives the existence of a particular state of facts.

It incorporates the Warranties in the policy either expressly or by reference. The warranties must be literally true and must be exactly complied with whether it be material to the risk. In Provincial Insurance v. Morgan, (1933) they held it that if any statement of the proposal form is untrue the contract shall be void and the insurer may forfeit the premiums paid by him. The policy that is issued will contain a recital that the:

(i) proposal and

(ii) the personal statement

shall form part of the policy and be the basis of the contract. Thus, any error, concealment or non- fulfilment of warranty will render the contract void.

Difference between Representation and Warranties

1. Provincial Insurance v. Morgan [1933] AC 240:- We must show it to be material before we can hold misrepresentation sufficient to void the contract.

Kinds of Warranty:  

Warranty may be:

(i)     of fact and

(ii)   of belief.

1. Warranty of Fact: In Merchants and Manufacturers Ins. Co. v. Hant (1941), it held that where it relates to a fact which is definitely ascertainable, the warranty must be absolute.
2. Warranty of Belief: In Joel v. Law of Union,(1908) they held it we can only expect the insured to warrant the accuracy to the best of his knowledge and belief and not the literal truth of his answers. In Grant v. Ajtna Insurance, (1862) we stated it that the warranties, relating to the future may only be statements about his expectation or intention i.e he will not take up any hazardous occupation. It requires the proposer to declare his statements and answers as true in every.

In E.M. Muthappa Chettier  v. Venus Assurance Co. Ltd. and others,  (1944) it was held that the assured induced the Insurance Company to issue a policy on his life by fraudulent concealment of material facts, The assured made false declaration that he had never made a proposal for life insurance before. They accordingly held it that the policy became void. Neither the assured nor it entitled his heirs to recover the amount from the insurance company.  Similar was the case in S. Radhakishandas v. North British Mercantile Insurance Co. Ltd (1939), they held it that withholding of material information was wilful and in fraud and it entitled the company to avoid the contract.