Insurance proposals and forms18th April 2021
Proposal form is the basis of the Insurance contact between the Insurer and the insured. The details filled in the insurance proposal form is critical for the company to accept or reject the policy.
When anyone applies for an insurance policy, the proposer who is the payer or life to be insured in the Insurance policy fills the proposal form. This is the most important document which provide the complete details of the proposer and the life to be insured in the policy. Based on the information provided in the document the company will evaluate the risk to be insured and decide the premium rates applicable. They may also decide the condition on which the company is ready to accept the risk.
Name of proposer is very important for identification. It should be correctly and accurately written so that the policy can incorporate the correct name and identity.
Address should be accurately given because of several reasons, such as, identity and communication, and sometimes this is important for rating purpose, e, g., motor, burglary etc.
Information as to occupation is particularly important in case of life insurance, personal accident insurance and liability insurance as this will influence the rate or decision of an underwriter.
This is the subject-matter of insurance and, therefore, should be properly described so that correct insertion can be made on the policy.
The amount for which insurance cover is required should be adequately mentioned.
This is the limit of the insurer’s liability. It must represent the actual value of the property or the subject-matter of insurance.
- Claims History
This has an influence on underwriter’s decision and must, therefore, be truthfully answered. Details of all previous related losses, whether insured or not, must be correctly given.
- Other Insurances
Information as to other past or present related insurances is required to be given. This is important for applying contribution amongst various policies wherever applicable.
This is also important for assessing the moral hazard of the proposer since it might indicate the reason for effecting numbers of policies. Information as to other insurances also enables the insurer to make necessary queries with other insurers about the proposer.
The insurer would like to know whether any insurance of this proposer was previously declined by any other insurers. This information would enable the insurer to find out from other insurers the cause of declinature.
Every proposal form contains a declaration to the effect that;
The answers given in the proposal form are true and nothing has been concealed or misrepresented.
The proposer agrees to pay the premium and accept a policy that is usually issued by the insurer for that class of business.
The proposal form and the declaration shall form the basis of the contract.
The proposal is required to be signed by the proposer or by the authorized person when the proposer is not an individual.
The signature is to be dated.
By comparing various specimen proposal forms the students would realize that apart from the above common type questions, there are numbers of other types of questions peculiar to various branches and different policies.