Alberta General Insurance Level 1 Practice Exam

A waiver in insurance terms refers to the voluntary relinquishment of a known right. This means that an insured party may choose to give up certain rights or claims that they would normally be entitled to under the terms of an insurance policy. For instance, if an insurance policyholder waives their right to receive a certain benefit or coverage, they are making a conscious decision to forgo that specific protection or entitlement.

Understanding waivers is essential for both insurers and policyholders, as it highlights the importance of informed consent in insurance agreements. By agreeing to a waiver, the policyholder acknowledges the implications of their decision and accepts that they may not be able to claim those rights in the future.

In this context, the other options do not accurately define a waiver. A discount on the premium refers to a reduction in the cost of insurance while a mandatory fee indicates a compulsory charge associated with the policy. A temporary suspension of coverage suggests a pause in the effectiveness of an insurance policy rather than the relinquishment of rights. Thus, the definition of a waiver as a voluntary relinquishment of a known right stands apart as the most accurate representation of the term within the insurance domain.