What does Estoppel prevent in an insurance context?

In the insurance context, estoppel prevents one party from denying a prior statement or representation that has been made. This legal principle is grounded in fairness and aims to avoid injustice that could arise if a party were allowed to go back on their word or previous representations. For instance, if an insurer has previously assured a policyholder about the coverage provided under a certain policy, the insurer may be estopped from later denying that coverage when a claim is made. This principle is especially significant in cases where one party has relied on the words or actions of the other to their detriment, thus promoting consistency and trust in contractual relationships.

Understanding estoppel reinforces the importance of clear communication and accurate representations in the insurance industry, ensuring that neither party can unfairly change their position after a claim or agreement has been made.