Which outcome can occur if a warranty is found to be untrue?

When a warranty in an insurance contract is found to be untrue, the insurer may have the right to void the contract. A warranty is a statement or promise that a fact is true at the time the contract is made, and it is a fundamental part of the contract. If it's discovered that the warranty is untrue, it can indicate that the risk was misrepresented, which undermines the basis of the agreement between the insurer and the insured.

In such cases, the insurer can act on the breach of warranty because it relies heavily on the accuracy and truthfulness of the warranties at the time of underwriting. This breach gives the insurer grounds to void the contract, meaning that the policy can be cancelled as if it never existed, and no benefits would be provided under that policy. This underscores the importance of honesty and accuracy in the application process, as it directly affects the validity of the policy.

The other potential outcomes, such as the policy remaining in effect, the insurer being required to pay a claim, or the applicant receiving a refund, do not hold in this context. A warranty's fundamental nature as a promise affects the contractual obligations significantly, making the voiding of the contract a critical consequence of an untrue warranty.