When does a policy become effective after a conditional receipt is given by an agent?

A policy becomes effective after a conditional receipt is provided by an agent when the conditions specified in that receipt are met. This means that the insurance company has laid out certain criteria that must be fulfilled for the coverage to take effect. The conditional receipt typically indicates that the insured must meet certain underwriting requirements or that an initial premium payment has been made.

This approach is significant because it assures both the insurer and the insured that coverage is not simply granted upon application but is contingent upon fulfilling specific conditions that help manage the risk for the insurance company. For instance, if the applicant is required to undergo a medical examination or provide additional documentation, the policy will only take effect once those requirements have been satisfied. Thus, understanding the implications of the conditional receipt is crucial for both agents and policyholders in insurance transactions.