In insurance, acceptance of an offer occurs when what action is taken?

In insurance, acceptance of an offer fundamentally occurs when the insurer issues a policy after underwriting. This step signifies that the insurer has evaluated the application, assessed the risks involved, and decided to accept the applicant as a policyholder.

Issuing the policy indicates that the insurer has formally agreed to the terms laid out in the application and is willing to provide coverage as stipulated. This action reflects the completion of the negotiation process and the formation of a binding contract between the insurer and the policyholder.

While signing the application, receiving premium payments, and reading the contract are important parts of the insurance process, they do not represent the formal acceptance of the insurance offer. Signing the application only signifies the applicant's intention to seek coverage, and while premium payment is crucial for the policy to take effect, it is the insurer's decision to issue the policy that solidifies acceptance. Reading the contract is an essential step for the policyholder for understanding the terms but does not play a role in the acceptance of the offer itself.