For three consecutive years, an insurer has routinely accepted a commercial property owner's premium payments 15 days past the official due date without ever issuing a notice of cancellation. The insurer's repeated acceptance of these late payments is an example of an implied waiver. When a fire occurs on the 10th day after the most recent due date, the insurer attempts to deny the claim by strictly enforcing the policy's lapse provision. Because the insured detrimentally relied on this established pattern, which legal doctrine legally bars the insurer from suddenly reasserting their right to cancel the policy for late payment?
- EstoppelAnswer
- BExpress waiver
- CApparent authority
- DBreach of warranty
Answer
Estoppel
The correct answer identifies the legal doctrine that prevents a party from enforcing a right they have historically relinquished. Because the insurer created a pattern of accepting late premiums (an implied waiver), they are legally estopped (stopped) from suddenly enforcing the strict deadline to deny a claim after the insured detrimentally relied on that pattern.
Step-by-Step Solution
Key Concept
Waiver and Estoppel