What is estoppel in insurance?

Estoppel in insurance refers to a legal principle that prevents an insurer from denying coverage based on prior actions or representations. This principle is grounded in the idea that if an insurer has led a policyholder to believe that certain coverage is available or that they can rely on specific representations about a policy, the insurer cannot later contradict that understanding to deny a claim. Essentially, estoppel protects the insured from being disadvantaged due to the insurer's inconsistencies between prior conduct or assurances and their subsequent denial of coverage.

The application of estoppel in insurance ensures fair dealings and upholds the reasonable expectations of policyholders. It establishes a form of reliance where the insured has acted based on what the insurer conveyed previously, making it unjust for the insurer to assert a different position later. This concept reinforces trust and stability in the insurance relationship, ultimately safeguarding the rights of policyholders.