Canadian Accredited Insurance Broker (CAIB) One Practice Exam

Which statement regarding conditions and warranties in property insurance is not true?

1. A claim is still valid despite a breach of warranty by the insured as long as the breach did not directly cause the loss

2. A condition is a requirement that the insured do or not do something

3. A claim is still valid despite a breach of condition if the loss was not caused by the breach

4. A warranty is a promise that certain facts are true and shall remain true

The correct answer is: A claim is still valid despite a breach of warranty by the insured as long as the breach did not directly cause the loss

A claim remains valid despite a breach of a warranty only if the breach did not have any bearing on the loss. Warranties in property insurance are strict requirements, and if the warranty is breached, it generally renders the claim invalid, regardless of whether the breach contributed to the loss. In contrast, conditions are requirements that the insured must adhere to, and breaches of conditions can sometimes allow claims to proceed if it can be demonstrated that the breach did not cause or contribute to the loss. Therefore, the statement regarding the validity of a claim regardless of a breach of warranty is not accurate. The other options accurately describe the nature of conditions and warranties in property insurance. A condition is indeed a stipulation that can require action or inaction from the insured, while a warranty involves a promise regarding the truth of specific facts that must be maintained throughout the insurance contract.