Main Document Used in Insurance


 A Sample of an Insurance Proposal Form


1. The key information in a standard proposal form is as follows:

(1) The name and address of the insurance company.

(2) A clear statement of the type insurance cover offered by the insurance company, including any 'extensions' to the policy.

(3) Questions designed to elicit facts concerning:

              i.  The proposed assured or the property to be insured.

             ii.  The nature of the risk.

            iii.  The circumstances affecting the risk.

            iv.   The insurance record of the proposed assured.

The proposer has to answer all these questions TRUTHFULLY.

(4) A statement of declaration by the proposer that all the statements contained in the proposal form are true and correct and that he has not concealed misrepresented or misstated any material fact.

(5) The signature of the proposer.

(6) The date the proposal is signed.

2. The functions of the proposal form are as follows:

(a) An application form for insurance coverage by the proposer (customer). It is not a contract of insurance. It is an offer from the proposer to the insurance company to buy insurance coverage.

(b) The facts disclosed in the proposal form helps the underwriter to study the risk so that he can decide on:

             i.  Whether or not to accept to give insurance coverage to the proposer. After studying all the information given, the insurance company may consider him a bad risk and refuse to accept the proposal.

              ii.  The amount of premium to be charged.

(c) The proposer will also know:

          i. Exactly what type of cover he would get should he suffer a loss.
           ii. The instances when he would not be covered, (the exclusion clause)
           iii. His own liability in the event of a loss (such as the "excess" clause in motor insurance policy)

(d) The proposal form provides documentary proof of what the proposer has disclosed about the property/person insured. If it is subsequently proven that what is written there is not true, then the insurance company can refuse to pay when a claim for loss is made. This is because the insurance contract is based on 'utmost good faith'. It can be declared null and void if one of the parties is not acting in 'good faith', that is, he has lied or misrepresented or concealed the material facts.

 Example of an Insurance Proposal Form

 An insurance proposal form or document is drafted by the insurer who seeks answers from the proposer to the main material aspects of the risk that the proposer is offering to buy. The proposer has to answer all the questions truthfully.
                                          

Sample of an Insurance Cover Note


1.      The key information in a cover note are as follows:

(1)  The name and address of the Insurance Company.

(2)  The insurance policy number.

(3)  The cover note number (it is called a certificate of insurance for a motor policy).

(4)  The name and address of the policy holder, including his identity card number.

(5)  Details concerning the property insured (in the case of motor policy: vehicle registration number, its make and model; the year of manufacture; the engine number; the chassis number; its cubic capacity and estimated value).

(6)  The period of cover.

(7)  Any limitations as to the use of the property (in the case of a motor policy, it will be clearly stated that the vehicle is only for social domestic or pleasure use only. Cover will not be given if the vehicle is used for other purposes such as for business, racing, etc.).

(8)  Any other conditions as set by the insurance company (in the case of a motor policy, the person (s) who are allowed to drive the vehicle will be clearly spelt out).

(9)  The signature of the General Manager of the insurance company.

(10)       The amount of premium paid.


2.      The functions of a cover note are as follows:

(a)   The evidence of an insurance contract between the proposer and the insurance company.

(b)  A temporary cover for a limited period, until such time as the insurance company can prepare and issue the insurance policy to the insured. The insurance company then issues the client with an insurance policy which is really the legal contract between the insured and the insurance company.

  
Example of Insurance Cover Note

 A cover note is issued to the insured by the insurance company as evidence of the insurance coverage provided. These will eventually replaced by the Insurance Policy which is the actual legal contract between the proposer and the insured.

 Sample of an Insurance Policy


1.      The key information in an insurance policy are as follows:

(1)  The name of the insurance company

(2)  The policy number

(3)  The name and address of the insured

(4)  The extent of the insurer's obligation and the types of losses that are covered under the policy and the period of the cover

(5)  Details of the property insured

(6)  The premiums to be paid

(7)  The signature of an officer who signs on behalf of the insurance company

(8)  The procedure to be taken in the event of a claim and the method of adjusting estimated premiums (see Example of an Insurance Policy below).

(9)  Clear statements of the 'exclusions' or instances when the insurance company will NOT pay compensation (see Example of an Insurance Policy below).

2.      The functions of an insurance policy are as follows:

(a)  A written agreement or actual legal contract between the proposer and the insurer.

(b)  The original copy of the Insurance Policy has to be submitted when making a claim on the insurance company.

Example of an Insurance Policy

This is an actual agreement between the insured and the insurer.

Reference:
Betsy, L., & Tan, S.K. (1999). Insurance., Modern certificate guide: Elements of Commerce (pp. 229-133). Singapore: Oxford University Press.

Types of Insurance


Life Assurance 

It is known as 'Life assurance' but not 'life insurance' because the event that is insured against, i.e. death of the insured will definitely happen sometime in his lifetime. The only question is the timing. In the other branches of insurance, there is no certainty that the event insured against will ever take place. Normally, the aim of insurance is to compensate the insured for the loss or damage on the occurrence of the insured event. In life assurance, the insured person themselves cannot be compensated. Depending on the type of life policies, the insured or his nominees (usually, his dependents) will receive a sum of money, either as a lump sum, or as a regular sum of payments, called annuities, on maturity of the policy or on the death of the insured whichever comes first. The aim is savings for one's retirement or some special occasion as well as providing insurance for one's dependents. There are two main branches:

a)     Ordinary — deals only with the policy holder or spouse
b)     Industrial — deals with the lower income wage earner

The chief types of life assurance policies are as follows:

a)   Whole life policies — lump sum payable at death or at some agreed age. Premium is lower compared to that for endowment policies because it is paid over a longer period.

b)     Endowment policies — agreed sum payable at the end of a number of years on maturity of the policy, or at death, whichever is sooner. They can be with or without profits. This kind of policy is quite expensive as it allows a person to save and have life cover. The insured can agree to pay a fixed monthly premium for a fixed period or yearly sum for a fixed period in the future. In return, he will receive an agreed lump sum on the maturity of the policy. If he dies before the maturity date (the agreed date of payment of the lump sum to the insured), his nominees will receive the lump sum agreed upon without having to make any more payments of premium. In return for a higher premium, some insurance companies offer a 'with-profit' assurance. This means that the insurance company adds bonuses to the sum the person is insured for each year.

c)     Family income policies — paid on the death of the insured in a series of regular repayments terminating with a final sum at the end of a period for the widow or dependents.

d)     Mortgage security policies — unpaid mortgage taken care of upon the death of the legal mortgager. This relieves the surviving dependents of the debt.

e)     Group life policies — taken out by small employers for employees in place of a pension scheme. They can also be taken out by members of a cooperative society.

The premium payable will depend on the following factors which will be asked in the proposal form:

a)     The sum assured
b)     The type of policy
c)     The age of the insured:
d)     The sex of the insured
e)     The occupation of the insured
f)      The health of the insured
g)     The family medical history





 Accident Insurance



Accident/Special casualty insurance provides insurance cover not provided for under fire, life, marine and motor. There are many types of special casualty insurance:
                                                               
(a)    Insurance of liability

(i)    employers' liability for accidents at work owing to employer's negligence;

(ii)   professional indemnity taken by lawyers, doctors, architects and engineers to cover against claims due to professional negligence, errors and omissions in the exercise of their professions;

(iii) public liability sometimes knows as third party cover taken by shops, factories or contractors to cover against claims made by members of the public as a result of accident or damage to their property or injury to their persons arising from negligence of the insured and their employees; and

(iv)  personal liability taken by individuals to cover against any claims by a third party who suffers loss to property or personal injuries caused by the negligence of the insured, such as accident due to a polished floor, or a loose tile or a pet animal.

(b)   Insurance of property: This includes 'all risk' policies, on machinery and personal effects taken by businessmen or individuals to cover against all risks except those specifically excluded in the policy. This includes insurance of herds and flocks against disease and burglary insurance.

(c)   Personal accident insurance: This is taken out by the individual to cover against total or partial disablement or death. Employers can also take out a group personal accident policy on their employees.

(d)   Workmen's Compensation insurance: In some countries, this type of insurance is compulsory under the law for employers to insure their employees under this insurance.

(e)   Cash in transit insurance: This covers against loss due to robbery of cash in transit.

(f)    Goods in transit insurance: This covers against loss when goods in transit (that is being transported from one place to another place) are damaged or stolen.

(g)   Plate glass insurance: This covers against loss when (toughened) plate glass used in the windows of shops and the doors of many commercial buildings are damaged due to accidents or vandalism.

(h)   Holiday insurance: This covers for:

(i)    cost of hospitalization and medical bills, up to a certain agreed sum, should the insured falls ill while on holiday abroad;

(ii)   loss of luggage or money while abroad;

(iii) cancellation charges should the insured falls ill and is unable to take the holiday already booked or paid for; and

(iv)  cancellation of the holiday as a result of strike, bad weather or transport breakdown, or additional expenses having to be borne by the insured as a result of these happening.

(i)    Insurance of interest: Includes fidelity guarantee and commercial fidelity guarantee taken out by firms such as banks to cover against embezzlement by their employees, such as cashiers and others employed in positions of trust. It indemnifies the employers against losses resulting from dishonesty of their employees.

(j)    Sickness insurance: This includes hospitalization and surgical insurance taken by the individual to cover up to a certain maximum limit of hospital charges in the event of his or members of his immediate family being hospitalized. 



Motor Insurance


Comprehensive motor policy covers against bodily and property damage to third parties, own property damage and loss of vehicle due to theft or fire. Third party motor policy covers against bodily and property damage to third parties. A third party motor insurance cover can be extended to include cover against fire and theft for extra premium. A motor insurance policy may be extended to include cover against passenger liability. It will indemnify the passengers of the vehicle against loss or damage of property or personal injuries in the event of a motor accident. This extension has to be taken by owners of public transport like taxi and bus companies. Under Singaporean law, it is compulsory for every vehicle to be covered by either comprehensive or third party policy. The premium payable will depend on the following factors which will be asked in the proposal form.


  1. The type of motor cover
  2. The type of car and the engine capacity of the vehicle
  3. The sum insured
  4. The age of the driver
  5. The cost of repairs
  6. The driver's record
  7. The driver's recent claims record
  8. The driver's occupation

The insurance company and the insured person are the first and second 'parties respectively; and anyone else is a third party. This includes, for example pedestrians, cyclists and the drivers or passengers in the other vehicles.





Fire Insurance


Fire Insurance consists of insurance cover for domestic and business premises and their contents. The premium charged depends on various factors based on the information obtained from the proposer in the proposal form. Amongst the factors are:
  1. The value of the building
  2. The source of energy for lighting
  3. The inflammability of its contents
  4. The record of the insured
  5. The presence of fire fighting facilities
  6. The type of materials used in the construction of the building itself 
  7. The type of buildings adjacent to the dwelling for which insurance is sought


Usually, fire insurance offices also provide 'consequential loss insurance' which ensures the firm of adequate compensation for loss of profits while re-building is going on. This covers loss of revenue whereas the ordinary fire policy covers capital loss. Extensions of fire insurance include boiler and machinery insurance which gives comprehensive cover against explosion of boiler and machinery. Flood policy, is also another extension of fire insurance.




Marine Insurance


 

Marine insurance consists of insurance cover for both ships and goods against perils at sea. It also covers for freight and ship-owners liability. These perils include fire, theft, piracy, jettison, capture, and seizure, detention by governments, bad weather, foundering and collision.





Aviation Insurance 



Aviation insurance cover is available for loss of or damage to aircraft, personal accident to passengers, third party risks (public liability) in respect to both person and property and for cargo sent by air. Staffs who fly regularly are covered against accident by group insurance schemes. Aviation insurance is handled by a large number of Lloyd’s syndicates, the aviation departments of some of the composite companies and by a few specialist companies in the UK.



Nuclear Insurance


Nuclear insurance is now available in some 25 countries like Switzerland, Japan, Belgium, Denmark, Germany, France, Italy, Netherlands, Egypt and Philippines. It covers against damage to property and consequential loss of operation as well as third party liability, consequent to outbreaks of fire and other calamities in nuclear installations like nuclear reactors fuel storage areas, fuel re-processing, enrichment and fabrication plants. The third party liability cover for nuclear risks is particularly complicated and financially exhausting since the full extent of the damage and thus the total compensation to be indemnified by the insurer will not be known immediately but may be manifested years later. Moreover, the area affected may be very extensive. Nuclear insurance is handled by insurance companies which have organized themselves into ' nuclear insurance pools'.


Reference:
Betsy, L., & Tan, S.K. (1999). Insurance., Modern certificate guide: Elements of Commerce (pp. 223-228). Singapore: Oxford University Press.

INSURANCE


Important of Insurance

Every individual business faces risks. It could be the risk of loss and damage to property, vehicles and stock due to fire, burglary, flood, accident and even theft by its own employees. It could be the risk of being sued for claims by members of the public, its customers and even by its own employees due to damages and losses suffered by these people as a result of its negligence. It could also be the risk of financial loss due to bad business decisions or unanticipated changes in demand for the business' goods. In return for a small premium, insurance underwriters are willing to offer a wide variety of insurance cover (see Types of Insurance) to the ordinary business to protect it against some of these eventualities. Should the insured risk occur, the business will be indemnified and protected?

It must be realized, however, that not all risks faced by the business is insurable. Some, such as loss due to bad business decisions and unanticipated changes in demand, are non-insurable.  The insurance premiums collected by the various insurance companies in the country forms a very important pool of liquid funds in the country. Apart from setting a certain proportion aside to meet the claims of those who do eventually suffer loss as a result of the insured risk occurring, the rest of the funds provide an important source of finance for the development of the national economy which are shown on the figure on the next page:

(a) Invested in shares in industry and commerce, at home or abroad;

(b) Lent out to businesses and families for example to purchase property;

(c) Lent out to central governments and local councils.

Insurance is of particular importance to the UK. Sale of general and life insurance policies of British Insurance companies abroad via overseas branches forms a very important part of her (UK) invisible exports. The repatriation of interest, dividends and profits from these overseas branches back to the UK also helps in her Balance of Payments.


Insurance is a pooling of risks to enable people to share risks. In life, everyone including businessmen, faces risks, resulting in losses. Any loss due to the insurer's risk materializing will be compensated for out of the common pool. The amount of compensation will be just enough to indemnify or restore the insured to the position he was in immediately before the loss. The indemnity will not exceed the amount originally insured for. The insurance company will have to study the risk involved for each insurance proposal. It will consider all factors that may make the insured risk more likely to happen. The basic principle is: The higher the risk, the higher the premium charged. The premium finally payable by the insured can be calculated based on:

(a) The insured value of the property;

(b) The tariff rate or the rate of premium quoted by the insurance company.

Illustration

After studying the risks involved for a certain proposal for fire insurance, the insurance company quoted a rate of 20 cents per $100. Suppose the value of property was $100,000, the total amount of insurance premium payable would be:

Rate quoted to insure property against fire 20 cents per $100

Insured value of property $100,000

Amount of premium payable  0.20 x 100,000 = $200
                                                    100

The premium payable ($200 per year) is so small compared to the amount of possible compensation payable, i.e. $100,000. 'This is because the total number of people who face the risk of loss due to fire is very great. It incorporates all owners of properties in the country. Therefore, the number of those who are willing to contribute to the central pool is very great. Consequently, the central pool is very big even though each insured pay a small premium. But only a small percentage of the total population who buys fire insurance will eventually suffer a loss. So, it is possible to pay the few unfortunate from the central pool. It is a case of the fortunate many (who did not suffer any loss due to fire) who help the unfortunate few (who did suffer a loss due to fire). This is the whole principle of 'pooling of risks'.

How Insurance Company Make Profit?

Insurance underwriters are in business providing an essential service to the public. In return, they hope to make a profit for their shareholders. Insurance underwriters sell insurance cover to their clients in return for insurance premiums. In order to reduce competition amongst themselves and to introduce stability into the business, they have introduced uniform practices such as adopting standard tariffs or rates of premium and standard forms of policy, especially in fire insurance. The proper management of funds will ensure that while there is sufficient liquid funds out of which claims can be promptly paid, the rest of the funds will be skillfully invested to earn an income in excess of their expenses so that the insurance company will make a profit.

Insurable and Non-Insurable Risks

Insurers (i.e. insurance companies and insurance underwriters) will only undertake to cover anyone against insurable risks. Insurable risks are those whose chances of occurring can be mathematically calculated by statisticians and actuaries from available statistical records. The calculated risk is then used as a basis for computing the premium to be charged. This must be high enough to ensure that the insurance company will not run at a loss in the long run, in order to meet the various claims from the central pool. The insurer is able to cover such a risk because:


a)    A large number of people who are subjected to the risk, are willing to pool their risks, by contributing premiums to a central fund;

b)    Only a small number actually suffers loss;

c)     Claims in the long run are less than the funds available to meet them.

Examples of insurable risks are perils at sea, fire, burglary, personal liability, motor accident and flood. Some risks are non-insurable because it is not possible to calculate the chances of their occurring as no statistical records of their occurrence are available. Hence, no insurer can calculate the premium. Examples of non-insurable risks are war and trade risks like business losses due to bad management, failure of demand, rise in costs, changes in fashion and bad debt.

Over-Insurance

A man insures his property which is worth only $10,000 for $12,000. It is NOT to his advantage to do this because:

(a)   He has to pay a higher premium than otherwise necessary.

(b)  He can NEVER get $12,000 even if his property is totally destroyed. The maximum compensation is only $10,000 since insurance is a contract of indemnity.

(c)    He should not knowingly over-inflate the value of his property since insurance is a contract of utmost good faith.

Under-Insurance

A man insures his property which is worth $10,000 for $8,000. He hopes to save on the insurance premium since he will be paying a lower premium. However, under-insurance is also not advantageous to him because:

(a)   His property is not fully covered. If it is totally destroyed, the maximum he could get is only $8,000, since premium is only paid for $8,000. If half of the property is destroyed, the amount he would receive as compensation would be half of the amount covered (i.e. ½ of $8,000), i.e. $4,000 even though the replacement value of the property destroyed is 5,000. This is because insurance is a contract of indemnity.

(b)  He should not knowingly deflate the value of his property since insurance is a contract of utmost good faith.

Principles and Doctrines of Insurance

These fundamental principles ensure that the whole basis of insurance — the pooling of risks — runs properly. The insured would not be able to defraud the insurer who will in turn be able to fulfill their obligations as contained in the insurance contract.

1. Insurable Interest: This applies to all contracts of insurance. We may only insure those things in which we have insurable interest. To have insurable interest in something is to be in danger of suffering loss or incurring some personal liability should the thing be destroyed or damaged in any way or to be able to derive benefits from its preservation. Examples:

(i)    I cannot insure my neighbor's house and property since I have no insurable interest in them.

(ii)   I can insure my own –V property, house, life, even my spouse's life or the life of the man who manages my business as I have insurable interest in these things.

(iii) I can insure my stock stored in a rented premises against fire although I cannot insure the premises (building) itself.

(iv)  A creditor may insure the life of his debtor up to the value of the amount owed.


2. Utmost Good Faith: This applies to all contracts of insurance. The insured must disclose fully all material facts known in answering all questions in the proposal form and in all dealings with the insurance company. The insurance company must be informed of factors that are likely to increase the chances of the insured risk occurring because it will base the computation of the premium on the truth of the information supplied. Failure to disclose the whole truth will make the policy void and the insurance company will refuse to pay compensation should a loss occur. Example: When 1 apply to insure my premises against fire, it is my duty to inform the insurance company if my premises contains goods which are inflammable.


3. Indemnity: This Applies to all contracts of insurance except life assurance and personal accident insurance. To indemnify' means to restore a person to the position that he was in immediately before the event concerned took place. Thus, all compensation to the insured who had suffered a loss would be to indemnify him, and NOT to allow him to make a profit out of his misfortune. Life assurance and personal accident policies are not contracts of indemnity because it is not possible to restore the dead to life, or to restore an amputated leg for instance, to one who has met with an accident. Instead, a lump sum called the 'benefit' is paid to the beneficiary. Examples:

(i)    A new motor car was insured for $100,000. After 6 months, it was totally wrecked in a motor accident.

(ii)   The owner would be paid compensation in the form of a sum of money which will enable him to buy a 6 month-old car of the same make, that is, depreciation on the car would be considered. If the current market value of such a car is $85,000, then the owner would get a compensation of $85,000. This is sufficient to indemnify him.

(iii) Mr X insured his stock against fire for $3,000. One-third of it was destroyed. Even if the replacement value of the stock destroyed was $1,100, Mr X, would only receive a proportionate compensation of $1,000 (1/3 of $3,000) as he had paid premium based on $3,000. If the replacement cost of the stock destroyed is $900, then Mr X would be reimbursed $900 even though he had paid a premium based on the higher figure. If Mr X's stock 5 p was totally destroyed, the maximum compensation he could get would be only $3,000 even though the replacement value might be $3,300.

  • The First Corollary of Indemnity — Contribution: This applies to all contracts of insurance except life risks. Contribution' applies where a person has insured identical risks on the same property with a number of companies, or when policies overlap. The amount of the loss is shared proportionately between the insurance companies. Examples:

Ø Suppose Mr A insures his goods worth $1,000 against fire for $1,000 each with 3 insurance companies. In the event of a loss due to fire, Mr A would receive a maximum of $1,000; each of the insurance companies paying $333V3. He cannot receive $1,000 from each insurance company, or he would be making a profit.

Ø However, should Mr A insure his life for $100,000 each with three insurance companies, his next-of-kin can receive $300,000 altogether should he pass away. This is because life policies are NOT policies of indemnity

  • The Second Corollary of Indemnity — Subrogation: This means that when the insurance company has paid out the claims, it 'subrogates' or steps into the place of the insured and inherits all his rights and remedies against third parties. Example:

Ø Mr A's car was wrecked in an accident. He agreed to accept $4,000 in settlement as indemnity. The wreck is then sold to a junk yard for $50. Mr A loses all rights to this amount because the insurance company, after paying him, is now the owner of the wreck. The $50 therefore goes to the insurance company.


4. The Doctrine of Proximate Cause: This applies to all insurance contacts. The root cause of the event is known as the proximate cause. This means that the insured will only be compensated if his loss was caused directly by the risk he has insured against. If the immediate cause of the loss was due to risks specifically excluded by the insurance policy, then no claim can be made. Examples:

(i) I insure my stock against floods. It is destroyed by flood waters. This is an insured peril. I am therefore entitled to claim compensation form the loss incurred.

(ii)Suppose the policy specifically excludes floods because my warehouse is near a big sluggish river which is very susceptible to over-flooding its banks with every heavy downpour. If flood is clearly the direct cause of the loss, then no claim can be made.

(iii)Similarly, Mr B may take a personal accident policy. One day, while driving, he had an accident. Because of the shock, he died of a heart attack. The insurance company may not pay because the root cause of his death was not due to the accident — but a heart attack.


Effecting an Insurance Policy

The buyer (or proposer) may either approach an insurance company direct, or alternatively may seek the assistance of an insurance agent or an insurance broker. The buyer will have to complete a standard proposal form which contains questions or instructions designed to obtain information regarding the property or the person for which/whom insurance is sought. All material facts known by the buyer must be disclosed otherwise the contract of insurance may be declared null and void. Based on the information given in the proposal form, the insurance company will study the risk involved and then decide on the premium and the proportion of the risk it is prepared to absorb. Bad risks will not be accepted by the company. For life assurance policies, the client may sometimes have to pass a standardized medical examination before the company accepts him. Normally, a risk is absorbed by a large number of underwriters. When the whole risk is covered and the premium collected, a cover note is issued to the client. This is evidence of an insurance contract. For life policies, no cover note is issued. Rather, the binding receipt of premium issued by the insurance company is evidence of the insurance contract. The insurance company then issues the client with an insurance policy which is really the legal contract between the insured and the insurance company.

 Procedure in Making a Claim

For a claim in an insurance policy to be valid, the insured must follow certain procedures. Failure to observe the instructions set down by the insurance company will prejudice the claim. Below is an example of a typical procedure for a marine insurance claim in the event of loss or damage to cargo. The principles involved are essentially the same for other types of policy as well.

1. The insured must inspect the goods before taking delivery if the loss or damage is apparent, or as soon as the loss or damage is discovered.

2.  The insured must then inform the insurer immediately, and request for a survey of the goods by the underwriter's agents or the surveyors named in the policy or insurance certificate. It is important that the condition of the goods and its packing must not be tampered with until the surveyor arrives. However, the insured may take steps to ensure that there is no further damage to the goods. In the case of a claim under other types of policies, say, motor, the insured must inform the insurance company immediately of the event of the loss. He must also make a report to the police within 24 hours after the accident. The police will make an independent report after its investigation as to the probable cause of the event. The vehicle will have to be towed to a workshop approved by the insurance company.

3. The insured must also request ship-owners, other carriers, forwarding agents, Customs, the Port Authority and other bales to be present for a joint survey. It is their responsibility to certify any loss or damage to preserve the insurance companies' rights against third parties. If the latter is found to be guilty of negligence, the insurance company can then sue them for damage or loss incurred.

4. Notice of the loss or damage must be made in writing to the bailees within the time limit prescribed.

5. Together with his claim form, the insured must submit certain documents to substantiate his claim:

  (a)   To prove insurance — original copy of the policy or certificate of insurance

      (b)  To prove ownership
(i)    bill of lading (for cargo)
(ii)   vehicle ownership card (for motor)
(iii) charter party

          (c)   To prove value
(i)    Invoices
(ii)   Packing lists

       (d)  To prove loss/damage
(i)    Survey report
(ii)   Landing/general survey report
(iii) Sales receipt

      (e) To enable the insurance company to make claims on third parties
    (i) The police report

Reference:

Betsy, L., & Tan, K. S. (1999). Insurance., Modern certificate guide: Elements of Commerce (pp.216-223). Singapore: Oxford 

                University Press.