South Carolina Personal Lines Practice Exam

When is the offer usually made in insurance contracts?

1. When the insurer issues the policy

2. When the insured pays premium and submits application

3. When both parties sign the contract

4. At the time of the first claim submission

The correct answer is: When the insured pays premium and submits application

In insurance contracts, the offer is typically made when the insured submits an application and pays the premium. This act represents the insured’s intention to enter into a binding agreement and outlines the coverage required. By paying the premium, the insured is conveying their acceptance of the terms and conditions presented in the application, which the insurer then considers in order to evaluate the risk and issue the policy. This moment establishes a possible acceptance of the offer to insure the individual under the terms defined in the application. The subsequent actions of the insurer—such as evaluating the application, issuing the policy, and confirming coverage—stem from this initial offer made by the insured. Thus, the combination of submitting the application and paying the premium is crucial in the formation of the insurance contract.