For an insurance contract to be valid, what must be true regarding the premium?

In order for an insurance contract to be valid, the premium must be paid or agreed upon. This is essential because the premium represents the consideration that the insurer receives in return for providing coverage. A contract requires both parties to agree on specific terms, and the premium is a critical component of these terms. Without the payment or mutual agreement on the premium, the insurer has no obligation to provide coverage, and the contract cannot be considered enforceable.

While a quoted premium may provide a basis for discussion, it is the payment or agreement that solidifies the contract. Additionally, having the premium appear on the insurance certificate or including Insurance Premium Tax may be relevant for administrative or regulatory purposes, but these factors do not determine the validity of the contract itself. Therefore, the focus on the payment or agreement of the premium is what ensures that both the insurer and the policyholder are aligned on their mutual obligations.