In typical insurance practice, acceptance occurs when which event happens?

• A. The insurer approves a prepaid application
• B. The premium is paid in full
• C. The policy is delivered to the insured
• D. The insured files a claim

Answer: (A)

Acceptance in insurance contracts happens when the insurer agrees to cover the risk by approving the applicant’s application and issuing the policy. Until that underwriting decision is made and the policy is issued, there’s no binding contract. Paying the premium in full is a separate step that provides consideration and may activate coverage after acceptance, but it does not itself form the contract. Delivery of the policy and filing a claim occur after acceptance and binding coverage.

So the moment the insurer approves the prepaid application is the point at which the contract is formed and acceptance occurs.