What legal principle prevents an insurer from denying a claim due to a policy lapse if the insured has paid the premium without notice of lapse?

The correct answer is that the legal principle of estoppel prevents an insurer from denying a claim due to a policy lapse if the insured has paid the premium without notice of the lapse. Estoppel is a legal doctrine that stops a party from making assertions or going back on their word, especially if another party has relied on that assurance to their detriment.

In the context of insurance, if the insurer has accepted the premium payment without notifying the insured of any lapse in the policy, the insurer may be estopped from later denying the claim based on that lapse. This principle safeguards the insured's reliance on the insurer's actions, such as collecting premiums, indicating that the policy is still in force. It essentially protects parties against being unfairly disadvantaged by others' actions or failures to act.

Other legal principles mentioned are relevant in different contexts: waiver involves the voluntary relinquishment of a known right (which might relate to an insurer not enforcing a lapse in a policy), utmost good faith emphasizes the obligation of both parties to act honestly and disclose all material facts, and reasonable expectations pertains to the idea that an insured should have a clear understanding of what their policy provides and covers. However, in this situation regarding the insurer denying a claim after accepting a premium payment, est