§ 1.6 Waiver and Estoppel

• Library: Guide to South Carolina Liability and Property Insurance Law (SCBar) (2019 Ed.)

§ 1.6 Waiver and Estoppel

The Supreme Court of South Carolina has defined waiver as the intentional relinquishment of a known right.⁶⁴ Further, to be effective, the waiver must be made with full knowledge of the right that is to be waived.⁶⁵ The party asserting the waiver must show such a waiver by a preponderance of the evidence.⁶⁶ The Court has further explained the difference between "waiver" and "estoppel":

Technically, a distinction exists between "waiver" and "estoppel", and the terms are not convertible, since a waiver is an intentional relinquishment of a known right, and is a voluntary act, while the elements of estoppel are the misleading of a party entitled to rely on the acts or statements in question, and a consequent change of position to his detriment. Under the law of insurance, the distinction between estoppel and an express waiver is fairly easy to preserve, but it is otherwise when the distinction to be drawn is between estoppel and a waiver implied from conduct. Partially, as a result of the difficulty in making a distinction, but more because of the fact that both doctrines are applicable to insurance cases, the Courts have found it unnecessary or inadvisable to make a distinction between "waiver" and "estoppel", and have used the terms interchangeably.⁶⁷

Generally, under South Carolina law, "[w]aiver cannot create coverage and cannot bring into existence something not covered in the policy."⁶⁸ Further, the Supreme Court of South Carolina has explained "[p]olicy provisions under which an insurer may assert non-coverage fall into two classes: (1) those providing for forfeiture; and (2) those limiting or excluding coverage."⁶⁹ The Court further explained that policy provisions proving for forfeiture "may be waived."⁷⁰ However, with regard to the other provisions the Court explained:

[W]ith regard to the latter, the weight of authority is said to support the view expressed in 29A Am. Jur., Insurance, Section 1135, page 289, as follows:

"The rule is well established that the doctrines of implied waiver and of estoppel, based upon the conduct or action of the insurer, are not available to bring it within the coverage of a policy risks not covered by its terms, or risks expressly excluded therefrom, and the application of the doctrines in this respect is therefore to be distinguished from the waiver of, or estoppel to assert, grounds of forfeiture. Thus, while an insurer may be estopped by its conduct or its knowledge from insisting upon a forfeiture of a policy, the coverage, or restrictions on the coverage, cannot be extended by the doctrine of waiver or estoppel."

To the same effect is the following, from 16 Appleman, Insurance Law and Practice, Section 9090, page 629:

"It has been broadly stated that the doctrines of waiver and estoppel cannot be used to extend the coverage of an insurance policy or create a primary liability, but may only affect rights reserved therein. While an insurer may be estopped, by its conduct or its knowledge or by statute, from insisting on a forfeiture of a policy, under no conditions can the coverage or restrictions on coverage be extended by waiver or estoppel."⁷¹

With regard to waiver, the court noted that South Carolina courts had accepted this rule.⁷²

However, with regard to estoppel, the Court has noted that South Carolina had rejected the general rule.⁷³ Further, the Court has stated that "[t]he essential elements of equitable estoppel are: (1) ignorance of the party invoking it of the truth as to the facts in question; (2) representations or conduct of the party estopped which mislead; (3) reliance upon such representations or conduct; and (4) prejudicial change of position as the result of such reliance."⁷⁴ The Court explained that these elements were not necessary to establish implied waiver, which it stated resulted "merely from conduct of the party against whom the doctrine is invoked from which voluntary relinquishment of his known right is reasonably inferable."⁷⁵ The Court did note that waiver and estoppel were related and that "the applicability of each in a particular situation results from conduct of the party against whom it is invoked which has rendered it inequitable that he assert a right to

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