Final answer:
The Fair Credit Reporting Act (FCRA) is the law insurance companies must comply with when acquiring personal information from third parties about an applicant, ensuring the proper handling of such information.
Step-by-step explanation:
When an insurance company needs to obtain personal information about an applicant from a third party, they must comply with the Fair Credit Reporting Act (FCRA). The FCRA is a federal law that was enacted to ensure the accuracy, fairness, and privacy of personal information assembled by Credit Reporting Agencies. The FCRA is also designed to protect consumers from the willful and/or negligent inclusion of inaccurate information in their credit reports. In the context of an insurance application, the FCRA imposes certain obligations on the insurance company, such as notifying the applicant that a credit report will be requested and providing the applicant with an adverse action notice if the information in the credit report is used to deny insurance coverage or charge a higher premium.