Which concept prevents a party from asserting a claim inconsistent with past statements if another party detrimentally relied on them?

• A. Waiver
• B. Nonwaiver agreement
• C. Estoppel
• D. Reservation of rights letter

Answer: (C)

Estoppel is the idea that a party cannot go back on a statement or action that another party reasonably relied on to their detriment. When one side makes a clear representation or behavior that leads the other to believe a certain fact is true, and that reliance causes the other side to change their position or incur costs, the first side is barred from later asserting a position that contradicts the prior statement. In insurance terms, if the insurer indicates that a loss is covered and the insured relies on that belief to act (pay costs, delay other actions), the insurer may be prevented from denying coverage later because to do so would be unfair given the earlier reliance. Waiver involves knowingly giving up a right; a nonwaiver agreement is a contract stating no waiver; a reservation of rights letter simply notes potential issues while preserving rights and does not by itself create the estoppel effect.