Completing the Application, Underwriting, Delivering Policies, Contract Law
An applicant submits an application with the initial premium, making an offer to buy coverage. The insurer issues the policy exactly as applied for. Which contract formation element is most directly demonstrated by the insurer's issuance of the policy?
Answer and explanation
Answer: A. A valid contract requires an offer and acceptance. Issuing the policy on the terms proposed in the application is acceptance of that offer, subject to the contract's remaining delivery and premium conditions.Source: Texas Judiciary — USAA Texas Lloyds Co. v. Menchaca — Opinion pages 31–32, valid contract requires offer and strict acceptance
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