What is required for an offer in an insurance contract?

In the context of an insurance contract, for an offer to be considered valid, the applicant must submit an application. The application serves as the formal proposal made by the prospective policyholder to the insurance company, indicating their interest in obtaining coverage and specifying the terms as understood by the applicant.

When the applicant submits their application, they are essentially making an offer to the insurer, which the insurer can then accept, reject, or counter. This marks the beginning of the contractual relationship as it lays the groundwork for the insurer to evaluate the risk and determine whether to issue a policy based on that application.

While it is true that an insurer must eventually issue a policy (this reflects acceptance of the offer), the act of issuing a policy itself does not constitute the initial offer but rather the acceptance of an offer made by the applicant. Similarly, although the underwriting process is important in assessing the risk and determining policy terms, it occurs after the application is submitted and is not required solely to establish the offer. Negotiation of terms can also happen, but it is not a prerequisite for an initial offer to exist; the submission of the application suffices as the starting point for the contract dialogue between the applicant and the insurer.