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Law and Compliances

Why is breach of warranty clause very important to the underwriters?

Answers 1

Warranty is a promise by the assured whereby he undertakes that some particular thing shall or shall not be done or that some condition will be fulfilled or whereby he affirms or negatives the existence of a particular state of facts. The implied warranty of seaworthiness does not apply directly to a time policy, although the insurer is not liable for losses attributable to unseaworthiness if he can show the ship put to sea in an unseaworthy condition. A warranty must be literally and exactly complied with even if it is not material to the risk. In event of a breach of warranty, the underwriter is discharged from liability as from the date of the breach of warranty, but without objection to any liability incurred by him before that date. Underwriters take a serious view of a breach of warranty which is only excused, where circumstances have changed making the warranty no longer applicable, where compliance would be unlawful, where the underwriter agrees to waive the breach. It should be noted that a breach of warranty is not excused by taking remedial action before a loss occurs The warranty has always been a protective measure used by underwriters to keep risk within reasonable limits. The Breach of Warranty Clause is a very important condition that enables underwriters to negotiate a reasonable premium within the probabilities of the risk. Nevertheless, both parties know that should a circumstance occur, which the underwriter would be prepared to cover at an additional premium, the necessary cover is available to the assured, such cover still be available even if the circumstance is not advised to the assured until after a loss has occurred.


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