What is meant by a "waiver" in insurance terms?

In insurance terms, a "waiver" refers to the voluntary relinquishment of a known right affecting coverage. This means that a policyholder or an insurer can choose to forgo certain rights or claims they would normally have under the insurance policy. For example, if an insurer waives the right to deny a claim based on late notification, they are essentially agreeing to proceed with the claim despite the policyholder not meeting the usual time frame for reporting it.

This concept is important in insurance contracts because it highlights how the terms of coverage can be adjusted based on mutual agreement or specific circumstances. Waivers are typically documented in writing and can vary widely depending on the situation and the parties involved. Understanding this concept helps policyholders navigate their rights and obligations related to their insurance coverage more effectively.

The other choices do not accurately describe a waiver. A mandatory legal document is not related to the definition of a waiver, which focuses specifically on relinquishing rights rather than requiring documentation. A discount for early renewal pertains to pricing strategies rather than rights associated with coverage. Lastly, the legal requirement to notify changes relates to communication obligations rather than the voluntary relinquishment of rights.