PSI Ohio Insurance Practice Exam

What procedure protects an insurer in case of application discrepancies?

1. The applicant signs a waiver

2. The producer submits a report

3. The applicant and possibly the producer initial any changes

4. The application is reviewed by a manager

The correct answer is: The applicant and possibly the producer initial any changes

The procedure that protects an insurer in case of application discrepancies is when the applicant and possibly the producer initial any changes. This process is significant because it ensures that any alterations made to the application after the initial submission are acknowledged and agreed upon by both parties. This protects the insurer by creating a clear record of the agreed-upon information, reducing the potential for misunderstandings or disputes regarding the application details. When changes are initialed, it provides evidence that all parties are aware of and have consented to the modifications, which is essential in the event of a claim or investigation. This procedure creates a layer of accountability and transparency, ensuring that if there's ever a dispute regarding what was disclosed or agreed to in the application process, there is a documented agreement on any changes made. Other options like signing a waiver or submitting a report do not specifically address the acknowledgment of changes directly on the application, and while a managerial review can be beneficial, it does not provide the same contractual agreement and protection that initialing offers.