Renewal Insurance 1 Practice Test

In insurance contracts, waivers and estoppel deal with how rights are surrendered or protected through actions or statements. Waiver is the voluntary relinquishment of a known right by the party who has it. For example, if an insurer repeatedly accepts a late premium or doesn’t enforce a policy deadline, it has effectively waived the right to insist on that deadline in those cases. It’s about choosing not to enforce a provision. Estoppel, by contrast, prevents a party from asserting a right because of that party’s own previous actions or representations that another party relied on, to that reliance’s detriment. If the insurer tells the insured that a claim will be paid and the insured relies on that assurance to act a certain way, the insurer may be barred from later denying the claim. These concepts are related but not the same. Waiver is not a type of policy or a premium discount, and it doesn’t always involve court action. Estoppel can apply in insurance situations and is not interchangeable with waiver.