A conditional receipt is a document issued by an insurance company to an applicant or policyholder as temporary proof of coverage, subject to certain conditions. It is typically provided when an applicant who pays the initial premium applies for a policy.

The binding receipt serves as evidence that the insurance company has obtained the application and initial premium payment. It provides a limited form of coverage during the underwriting process before the policy is officially issued.

Common conditions may include the approval of the applicant based on the insurer’s underwriting guidelines, the absence of any inaccurate or material representations on the application, and the insurability of the policyholder at the time of application.

If the terms outlined in the conditional receipt are not met, the coverage provided may be invalidated, and the company may refund the premium paid by the applicant. However, if the conditions are satisfied, the protection provided by the conditional receipt can be converted into a full insurance policy, with retroactive effect to the date the receipt was issued.