Allison’s auto insurance premium is accepted late for several years. What legal principle allows her policy to be reinstated despite the late payments?

The correct choice pertains to the legal principle of estoppel, which plays a crucial role in insurance contracts. Estoppel prevents a party from asserting a claim or right that contradicts what has been established as the truth based on previous actions or statements.

In the context of Allison's auto insurance, if the insurance company accepted her premium payments late on multiple occasions without taking any action to cancel the policy, they may be considered to have established a consistent practice that allows for late payments. This consistent acceptance can lead to an expectation that late payments are permissible, which impedes the insurer from denying coverage or claiming that the policy lapsed due to late payment.

As a consequence, if the insurer decided to deny a claim or cancel the policy based on the late payments, the principle of estoppel would prevent them from doing so, thereby allowing Allison's policy to be reinstated despite the history of late premium payments. This legal safeguard ensures that individuals are not adversely affected by arbitrary changes in policy enforcement when they have relied on the longstanding practices of the insurer.