Study of Various Proposal and Policy Forms Used in General Insurance

Proposal Form

Insurance Proposal Form is completed by the policyholder when applying for insurance.

You will need to fill in information about the risk you are insuring e.g. the rebuild cost of your house or type of car you own.

The proposal in insurance means a request, from the proposer to the insurer, for giving protection against a risk.

This request may be made orally (face to face or over the telephone) or in writing through a letter or very formally through a printed proposal supplied by the insurers.

Even though a proposal may be made in either of the ways, a convention has developed for using insurer’s printed forms in case of fire, life and accident business and slips or declaration forms in case of marine.

For properly understanding the proposal form the student should try to go through the specimen forms of various branches of insurance.

In this post, an attempt shall be made to discuss in general terms the important common questions one is expected to find in any proposal form.

These are;

Insurance Proposal Form

1. Name

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.

2. Address

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.

3. Occupation

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.

4. Subject-matter

This is the subject-matter of insurance and, therefore, should be properly described so that correct insertion can be made on the policy.

5. Sum-insured

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.

6. 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.

7. 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.

8. Declinature

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.

9. Declaration

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.

10. Signature

The proposal is required to be signed by the proposer or by the authorized person when the proposer is not an individual.

11. Date

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.

Insurance Policy

In insurance, the insurance policy is a contract (generally a standard form contract) between the insurer and the insured, known as the policyholder, which determines the claims which the insurer is legally required to pay. In exchange for an initial payment, known as the premium, the insurer promises to pay for loss caused by perils covered under the policy language.

Insurance contracts are designed to meet specific needs and thus have many features not found in many other types of contracts. Since insurance policies are standard forms, they feature boilerplate language which is similar across a wide variety of different types of insurance policies.

The insurance policy is generally an integrated contract, meaning that it includes all forms associated with the agreement between the insured and insurer. In some cases, however, supplementary writings such as letters sent after the final agreement can make the insurance policy a non-integrated contract. One insurance textbook states that generally “courts consider all prior negotiations or agreements … every contractual term in the policy at the time of delivery, as well as those written afterward as policy riders and endorsements … with both parties’ consent, are part of the written policy”. The textbook also states that the policy must refer to all papers which are part of the policy. Oral agreements are subject to the parol evidence rule, and may not be considered part of the policy if the contract appears to be whole. Advertising materials and circulars are typically not part of a policy. Oral contracts pending the issuance of a written policy can occur.