When an insurance company fails to enforce a provision in a contract and decides to pay a claim, they are giving up a legal right or advantage. This is known as which of the following?

• A. Estoppel
• B. Misrepresentation
• C. Waiver
• D. Concealment

Answer: (C)

Waiver is the voluntary relinquishment of a known right or privilege. When an insurer decides not to enforce a policy provision and instead pays the claim, it is giving up that provision’s enforcement. By accepting the claim without insisting on the provision, the insurer has waived its right to require strict compliance in that situation. This is different from estoppel, which involves preventing a party from asserting a right because of their prior conduct or representations that another party relied on; misrepresentation involves false statements; concealment is the withholding of information. In this scenario, waiver best fits.