Page 38 - The Insurance Times August 2025

The agreed-upon terms and conditions determine the rights showing of detrimental reliance. The waiver doctrine does
and responsibilities of each party, as well as the scope of not require such proof. The detrimental reliance
coverage of the given policy. As explained above, an insured requirement of the estoppel doctrine serves two purposes.
can exercise the option of estoppel, which arises from First, it restricts insurers' involuntary assumption of risk in
promises made outside the bounds of the written policy. cases where the insured can prove that the countervailing
Contractual obligations occur exclusively on the terms of the concern-harm to the insured-actually occurred. Second, it
insurance contract. Therefore, if a policyholder's claim falls serves an evidentiary role. The fact of detrimental reliance
outside the coverage outlined in the policy, the insurer is makes the insured's assertion that the agent made the
generally not estopped from denying the claim solely based promise more credible, which the insured seeks to enforce.
on contractual obligations.
In insurance, we deal with both types of estoppel: equitable
Estoppel and waiver, often used as synonyms and sometimes estoppel and promissory estoppel.
used interchangeably, however, convey different meanings.
Equitable estoppel focuses on actions or inactions that
Estoppel is not a cause of action; on the other hand, it helps prompt the policyholder to reasonably rely on their insurance
a complainant enforce a cause of action by thwarting the coverage. It would be inequitable for the insurer to
defendant from refuting the existence of a fact essential to backtrack on its commitments, as conveyed through its
establish the cause of action. It is a rule of evidence which actions or inactions. An example could be when an insurance
comes into operation if (a)the insurance company has made company chooses to ignore mild diabetes that the proposer
a statement of the existence of a fact to the insured( disclosed in the proposal form and issues the policy despite
complainant) (b) there is the existence of detrimental the proposer's assertion. A claim is reported where diabetes
reliance, where a policyholder must have honestly trusted is a concern. The insurer repudiates the claim, citing a pre-
the insurer's words or actions to their detriment (c) there is existing disease. Here, equitable estoppel should be invoked
an indication of detrimental reliance. To successfully invoke by the insured to negate the wrongful repudiation of the
estoppel, a policyholder must demonstrate that they have insurance claim.
suffered a financial or legal detriment as a result of relying
on the insurer's representations. The insured must have Promissory estoppel relates to a specific promise made by
acted in reliance on the reliability of the statement. the insurer. If the insurer makes an unambiguous promise
and the policyholder relies on that promise to their
To the contrary, a waiver is a contractual provision and detriment, the insured can estop the insurer from breaking
constitutes a cause of action by not asserting a right. Thus, that promise. For example, if an insurer, upon being explicitly
if the insurer agrees to waive its right, then it is bound by questioned by the insured about the coverage of Dilation
the contract, not by estoppel. and Curettage (D&C), confirms its coverage, the same is an
example of promissory estoppel. If the insurer denies a claim
Waiver arising from the use of the D&C procedure, it can be
A party to an insurance policy waives a right under the policy estopped from denying the claim in question by the insured.
if
(1) that party, with actual or constructive knowledge of the A promissory estoppel is a scenario where an insured has
facts giving rise to that right, expressly relinquishes the breached a warranty and cannot enforce the contract unless
right, or engages in conduct that the opposite party he proves that the insurer, either by his words or conduct,
reasonably believes to be an intentional relinquishment didn't rely on the breach of warranty to disown liability (or
of that right, and deny a claim) under the policy. It must also be proved that
the insured relied on the insurer's assertion to that effect.
(2) the relinquishment or conduct is communicated or
known to the counterpart or the opposite party(ies)
It is, therefore, unjust or inequitable for the insurer to go
back on the promise (s) made. An example of estoppel could
Waiver and Estoppel Contrasted be a scenario where an insurer, despite being aware of the

Both waiver and estoppel raise significant practical concerns. breach, issues or renews a policy. While taking out a health
Both principles lessen insurers' ability to maintain control insurance policy, the proposer, when asked, mentioned that
over the risks they assume. Estoppel requires insureds to his blood pressure occasionally fluctuates. He doesn't take
prove that such harm in fact occurred, in the form of a medication, and his blood pressure level remains relatively
34 August 2025 The Insurance Times