When must an insurance company notify an applicant about the potential for an investigative consumer report?

The correct choice centers on the compliance with the Fair Credit Reporting Act (FCRA). This legislation mandates that consumers be informed whenever an insurance company intends to obtain an investigative consumer report, which includes details gathered from interviews with individuals who may know about the applicant's lifestyle and character.

According to the FCRA, the notification must occur at or before the time the report is requested. This allows consumers to be aware of potential background checks and gives them an opportunity to understand how their information may be used in the insurance underwriting process. The requirement for disclosure ensures transparency and protects the rights of applicants, enabling them to know when their personal information is being assessed.

On the other hand, alternatives that suggest notification after the policy is issued or during the claims process do not align with the proactive intent of the FCRA, which seeks to inform applicants before or concurrently with the report being requested. Additionally, the option that indicates notification before the application is submitted is somewhat misleading; while it is important to inform the applicant early on in the process, the law specifies that the notification must occur at least at the time of request for the report or before making a decision based on it.