What does a conditional receipt typically signify regarding insurance coverage?

A conditional receipt generally indicates that coverage may become effective as of the date of application, depending on certain conditions being met. This means that if the insurance company later approves the application based on their underwriting criteria and the applicant is found to be insurable, then the coverage is backdated to the application date, assuming the initial premium was paid with the application.

This is an important aspect of conditional receipts, as they offer potential buyers immediate reassurance of coverage—from the application date—while still subject to the insurer's review. Therefore, if the policyholder fulfills the conditions set forth in the receipt, the coverage aligns with the requested start date, which is a significant factor in ensuring that there is no gap in coverage during the underwriting process.