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.