When does an insurance policy become effective if the agent gives a conditional receipt after collecting the initial premium?

A conditional receipt is a document provided to a policyholder by an agent when an initial premium is collected, indicating that the insurance coverage will begin under certain conditions. The key aspect of a conditional receipt is that it stipulates that coverage will become effective only when the conditions outlined in the receipt are fulfilled.

This typically means that the insurer must assess and approve the application for insurance based on the applicant's risk and other underwriting criteria. If the applicant meets the specified conditions (such as passing the medical exam or providing required documentation), the policy coverage will become effective as of the date of the receipt.

Thus, the insurance policy becomes effective when the conditions of the receipt are met, ensuring that the insurer has the opportunity to evaluate the risk before fully committing to provide coverage. This process protects both the insurer and the insured, ensuring that the policy is in force only when the applicant qualifies under the terms set by the insurer.