The agreement has two parts. Which statement best defines a definite offer in an insurance contract?

• A. The insurer approves the application and issues a policy
• B. The applicant submitting an application
• C. The premium is paid in full
• D. A counteroffer from the agent

Answer: (B)

In insurance, the offer comes from the applicant. When the applicant submits the application, they are proposing to enter into the contract on the terms shown, including the coverage and premium. This makes that action the definite offer being made. The contract becomes binding only when the insurer accepts that offer—typically by approving the application and issuing a policy or a binder. The payment of the premium is part of the consideration and can trigger coverage once the offer is accepted, but it doesn’t by itself define the offer. A counteroffer from the agent would be the insurer proposing new terms in response, not the applicant’s original definite offer.