What Does Waive Mean in Insurance Policies?

“Waive” is a term frequently encountered in the world of insurance, holding significant implications for both policyholders and insurance providers. In the context of insurance, to “waive” signifies the intentional relinquishment or abandonment of a right, privilege, claim, or condition.

The Meaning of Waive in Insurance

This action can be initiated by either the insurance company or the policyholder. An insurer might waive a specific policy condition, while a policyholder might waive certain coverages or rights. For instance, an insurance company could waive a waiting period for certain benefits, or a policyholder might waive the right to pursue a claim for a very small loss. The act of waiving must be a deliberate choice, typically requiring clear communication or formal documentation to be legally binding.

How Waivers Are Applied in Policies

A waiver, once established, effectively modifies the terms of an insurance policy or influences the process of a claim. When an insurer waives a right, they forgo their ability to enforce a particular policy provision or to deny coverage based on that provision. This could occur if an insurer overlooks a minor breach of policy conditions, such as a slight delay in premium payment, and proceeds with coverage as if no breach occurred. Similarly, a health insurer might waive a pre-existing condition exclusion if certain criteria are met, allowing benefits to be paid sooner.

Policyholders can also apply waivers, such as voluntarily declining certain optional coverages to reduce their premium costs. For example, an employee might waive participation in their company’s health insurance plan if they already have coverage through a spouse’s policy.

The consequence of a waiver is that the party giving up the right cannot later assert it, which impacts the responsibilities and benefits for both the insurer and the policyholder. Any modification or waiver to policy provisions usually requires a written endorsement to be valid and prevents verbal agreements from altering the policy’s terms.

Common Waiver Provisions

Beyond general applications, many insurance policies incorporate specific, named waiver provisions or endorsements.

Waiver of Subrogation

A Waiver of Subrogation is a common provision, especially in commercial insurance, preventing the insurer from seeking recovery from a third party who may have caused a loss, after paying a claim to the insured. This waiver is frequently requested in contracts between businesses, such as construction agreements or leases, to minimize potential disputes and litigation between the parties involved.

Waiver of Premium

Another common provision is the Waiver of Premium, typically found in life or disability insurance policies. This clause ensures that if the insured becomes totally and permanently disabled as defined by the policy, future premium payments are waived, allowing the policy to remain in force without additional cost to the policyholder. Conditions for this waiver often include a waiting period, such as six months, to confirm the long-term nature of the disability.

Waiver of Deductible

A Waiver of Deductible is also seen in some policies, where the policyholder’s obligation to pay the deductible is eliminated under specific circumstances, such as for certain types of glass damage in auto insurance or if a claim exceeds a certain dollar amount in homeowners insurance. These specific waivers are integral to the policy’s structure, often requiring an additional cost to the premium.