General Insurance PrinciplesQuestion 202 of 315
An applicant submits a completed application with the initial premium. The insurer issues a policy with a different premium class than requested. Under contract law, this is BEST described as:
a.A counter-offer that the applicant must accept before a contract is formed
b.An automatic binding contract effective on issue
c.An acceptance of the original offer
d.A void policy because the parties never met
Explanation
When an insurer issues a policy materially different from the one applied for, the issuance is a counter-offer rather than an acceptance. No contract exists until the applicant accepts the counter-offer, typically by paying the modified premium and taking delivery.
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