Non-Waiver Clause Law and Legal Definition

In the context of Insurance law, a non-waiver clause is a provision in the contract which states that the insured acknowledges that the insurer's investigation or defense of a claim against the insured does not waive the insurer's right to contest coverage later. Generally speaking, the purpose of non-waiver clause in a contract is to protect a party who excuses the other party's non-compliance with contract terms, and to prevent the parties' course of conduct under the contract from resulting in the loss of enforceability of the actual terms of the contract.

For example, if a contract requires monthly payments but the party owing payments only pays every other month, in the absence of a non-waiver clause, after a year of acceptance of the late payments a court would hold that the bimonthly payments constitute a breach of the contract. However, with a non-waiver clause, the party to whom the payments are due would be able to enforce the monthly payment provision, regardless of the course of conduct that was inconsistent with the contract language.