What does the term "waiver" refer to in an insurance context?

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In the context of insurance, the term "waiver" refers to the act of giving up a known legally enforceable right. This can occur when an insurer or the insured voluntarily relinquishes their legal claim to a particular benefit or right under the terms of the insurance policy. For instance, an insurance company may waive its right to deny a claim based on a certain condition if it has previously accepted claims under similar circumstances without objection.

Understanding waivers is important because they can affect the rights of both the insurer and the insured. For example, if an insurer waives its right to enforce a specific policy provision, it may not be able to later invoke that provision to deny a claim. This concept is crucial in ensuring that both parties are aware of their rights and obligations within the contractual relationship defined by the insurance policy.

In contrast, other choices such as prevention of fraud, alteration of policy terms, and transfer of risk involve different aspects of insurance practices that do not encapsulate the essence of a waiver.

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