Mississippi Property & Casualty Practice Exam

What is a "waiver" in the context of insurance?

1. The acknowledgment of unknown risks

2. The intentional relinquishment of a known right

3. A type of insurance policy modification

4. The rejection of false claims

The correct answer is: The intentional relinquishment of a known right

In the context of insurance, a waiver refers to the intentional relinquishment of a known right. This means that a party, typically the insurer or insured, intentionally gives up a specific right or claim they possess. Waivers are often found in insurance contracts where an insurer may choose not to enforce a particular provision or where the insured agrees to forgo specific rights, often as part of a negotiated settlement or during the claims process. Understanding the concept of a waiver is essential because it highlights the legal principle that parties can agree to modify their rights and obligations, provided that both parties have a clear understanding and acceptance of the terms. For example, if an insured waives their right to pursue further claims related to an incident after receiving compensation, that waiver is binding and prevents the insured from claiming additional compensation later for the same incident. Other options, while relevant to insurance, do not accurately define the concept of a waiver. Acknowledging unknown risks and the rejection of false claims pertain to risk management and claims integrity, respectively, rather than the relinquishment of rights. Similarly, a type of insurance policy modification refers to changes made to the terms of a policy and does not capture the essence of what a waiver entails.