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Promissory Estoppel

The carrier must honor their promises if you rely on them

Promissory Estoppel is another concept that comes from contract law.

Promissory Estoppel occurs when a promise is made (promise of coverage) and a party relies on that promise to her detriment.

If the promise is broken (the carrier discovers that there was a mistake and there should be no coverage), then the carrier will be barred from denying coverage.

For example, you call the insurance carrier that you believe is responsible for the loss (the insurance carrier of the person that hit you).

You tell them that you need a rental car. They tell you that they believe their client is at fault so that you can go ahead, rent a vehicle, and then turn in the receipts for reimbursement.

You rent the vehicle and drive it for three days when they call you back and tell you that there is no coverage for the loss because of the non-payment of premium of the responsible party.

In this case, you relied to your detriment on the promise that the said insurance carrier will pay for the rental car.

However, the promise was reversed on the fourth day (they told you that there was a mistake).

Therefore, the carrier will only be responsible to pay for four days of rental.

Most of the time the problem is to get the carrier to tell you that they made a mistake or to recognize that they made the promise at all.

To protect your interest, you should always put agreements and understandings with them in writing.

Remember that to apply this doctrine you must rely to your detriment on their statement.

You must do something to show that you relied on what they told you.

If you do not show this, then this legal concept will not apply.

Click below for an explanation of insurance coverages and terms:

Coverages and Terms Overview

Automobile Liability Insurance or Liability Page 1
Automobile Liability Insurance or Liability Page 2

Automobile Medical Payments or Personal Injury Protection (PIP) Page 1
Automobile Medical Payments or Personal Injury Protection (PIP) Page 2

Collision Coverage (Protection Against Loss to the Auto) Page 1
Collision Coverage (Protection Against Loss to the Auto) Page 2

Comprehensive Coverage (Protection Against Loss to the Auto) Page 1
Comprehensive Coverage (Protection Against Loss to the Auto) Page 2

Under or Uninsured Motorist Property Damage (UMPD) Page 1
Under or Uninsured Motorist Property Damage (UMPD) Page 2

Under or Uninsured Motorist Bodily Injury (UMBI)

Rental Reimbursement or Loss of Use Coverage Page 1
Rental Reimbursement or Loss of Use Coverage Page 2

Restoration Coverage

Towing and/or Road Assistance Coverage (Emergency Packages)

Insurance Clauses and Terms

Overview
Actual Cash Value or ACV
Additional Insurance Clause
Cancellation of Coverage Clause
Choice of Law Clause
Forum Selection Clause

Duty to Cooperate Clause
Duty to Report Losses Clause
Financial Responsibility Clause
Insurable Interest Concept
Interpretation of the Policy Concept

Mandatory Arbitration Clause
Mitigation of Damages Clause
Non Duplication of Benefits Clause
Proof of Loss Clause
Promissory Estoppel Concept

Reservation of Rights Concept
Reasonable and Necessary Clause
Right of Appraisal Clause
Right of Settlement Clause
Rights of Counsel Concept

Subrogation of Rights Clause Part I
Subrogation of Rights Clause Part II
Statute of Limitations Concept
Replacement Cost Value
Restoration Coverage
Transfer of Benefits Clause

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