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Offer and acceptance - Meaning - Principle of Insurance
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Offer and acceptance – Meaning

Offer and acceptance:

An offer is an expression of willingness to contract on certain terms, made with the intention that it shall become binding as soon as it is accepted by the person to whom it is addressed. In order to create a valid contract there must be an agreement between two parties. In insurance, the offer is typically initiated by the insurance applicant through the services of an insurance agent by tilling out an application for insurance. In other words people who are willing to take an insurance policy makes a proposal to the agent of the insurance company by filling up a prescribed proposal form which is available free of cost. In insurance the insured offers for entering into contract. There should be a valid acceptance on the part of insurer. When the insurer gives a notice of acceptance to the insured, it will become a valid acceptance. The acceptance of the offer depends upon whether the insurance is for property or liability, or for life insurance. For property and liability insurance, the offer is the application for insurance and the payment of the 1st premium, or the promise to do so. In most personal lines of insurance, the agent can accept the offer for the company, binding the company to the contract.

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