Unit 4 PPGI

Unit 4
Insurance Proposal
 Insurance proposal form serves as the basis on
which an insurance policy is issued.
 Accurate details need to be filled in order to avoid
issues later on
 Verification of details entered are necessary to enjoy
benefits of policy
Insurance Proposal
 When applying for insurance, a proposer has to fill
out the proposal form of the general insurance
company.
 The Proposal form is an important document which
provides the details of the proposer and the things
assured and which is used as a basis to ascertain the
insurability of an individual.
 Important aspects of your policy such as premiums,
and the terms and conditions are based on the
information that you provide in this document.
Insurance Proposal
 The insurance contract is based on the trust that the
details you enter in the proposal form are accurate
and to the best of your knowledge.
Form Filling
 Since the accuracy of details that are entered in the
proposal form are critical to the insurance policy,
necessary steps should be taken to ensure that the
person buying the policy is the one filling the form.
 Most people just sign the form and allow someone
else to fill the details. This might lead to the person
inadvertently missing out on some important details
that only you’ll know.
 Therefore, the form should not only be filled by the
proposer, but also checked once again to verify that
correct details are given.
 In the event the proposal form is in a language that
the proposer doesn’t understand, it should be made
sure that all the terms are clearly explained and the
proposer has full understanding of the contents in
the proposal form before signing the document.
Form
 There are many details required in the insurance proposal
form, but here are some of the basic and most important
ones, that if not filled properly can lead to issues in claim
settlement.
 Name – This is very important, as the name entered here
will be the name of the policyholder. At the time of
claim, if this name does not match, it can lead to non-
settlement of the claim.
 Address – If the address is not properly stated, it can lead
to a communication gap, which might mean missing out
on crucial correspondence from the insurance company.
Form
 Occupation – Which occupation the proposer is
involved in affects the decision of the insurance
underwriter to a great extent. It can lead to rejection
of the proposal or hike in the rate of premium.
 Sum Insured – This is the reason why you are
opting for the insurance policy. The sum insured is
the amount for which you are seeking coverage, and
is also the limit to which the insurer is liable.
 Age- the age as per the last birthday before the
filling of the proposal form.
Declaration
 As mentioned before, the relation between the insurer and the
insured is based on trust, and every proposal form comes with
a declaration to this effect. These declarations consist of
statements such as: ‘details given here are true and nothing has
been hidden or misrepresented’, ‘the proposal form shall form
the basis of the contract’ and ‘the proposer agrees to pay the
premium and accept a policy that will be offered after due
assessment’.
 From the above points, we come to understand just how
important the proposal form really is. Hence, it is paramount
that those buying an insurance policy should pay meticulous
attention while filling their details in this important document,
failure of which may lead to adverse consequence.
 A cover note is a temporary document issued by an
insurance company that provides proof of
insurance coverage until a final insurance policy can
be issued. A cover note is different from a
certificate of insurance or an insurance policy
document.
 A cover note features the name of the insured, the
insurer, the coverage, and what is being covered by
the insurance.
 Insurance companies issue a cover note to
provide an individual with proof of insurance
before all the insurance paperwork has been
processed.
 During this time, the insurer may continue to
evaluate the risks associated with insuring the
holder of the cover note, and the cover note will
continue to serve as the insured’s proof that he
or she has purchased coverage until the insurer
issues the policy documents and certificate of
insurance.
 In general, the cover note provides the same
level of coverage as the full insurance policy,
though insurers may place some restrictions
while they make any final determinations on the
risks associated with the insurance policy.
 How long the cover note remains valid depends
on how quickly the insurance company can
create a new policy, and whether the insurer has
any problems with the policy coverage in
between selling the policy and issuing the policy
document.
 If the cover note expires before the permanent
policy documentation has been received, the
insured individual will either receive an
automatic extension of the cover note, or they
can request one be sent.
 Insurance companies may allow someone who
has recently purchased an insurance policy
(but does not yet have a formal policy) to
cancel the purchase. This allows someone who
only holds a cover note to receive a refund,
provided that a claim on the policy has not
been made during the cancellation period.
Example of a Cover Note
 In the case of purchasing a vehicle with a loan,

cover notes can play an important role in
binding the transaction. That's because the
lending institution typically won't allow the
individual purchasing a vehicle to drive it off
the lot without insurance.
 Often, a buyer will call their insurance company
and buy the policy over the phone, and the
insurance company will immediately email or fax
a cover note to the buyer, which will allow them
to drive the car off the lot. However, this will
only be necessary if the insurance company can't
immediately deliver a certificate of insurance.
 Some insurance companies do not issue cover
notes and instead issue a certificate of insurance
immediately when the policy is purchased and
accepted.
Certificate of Insurance
 A certificate of insurance (COI) is issued by
an insurance company or broker. The COI
verifies the existence of an insurance
policy and summarizes the key aspects and
conditions of the policy.
 For example, a standard COI lists the
policyholder's name, policy effective date, the
type of coverage, policy limits, and other
important details of the policy.
 Without a COI, a company or contractor will
have difficulty securing clients; most hirers will
not want to assume the risk of any costs that
might be caused by the contractor or provider.
 Small-business owners and contractors
typically require a COI that grants protection
against liability for workplace accidents or
injuries to conduct business.
 It is vital that the client checks the policy
coverage dates and the limits of the policy.
Definition
 A certificate of insurance is a document used to
provide information on specific insurance
coverage. The certificate provides verification
of the insurance and usually contains
information on types and limits of coverage,
insurance company, policy number, named
insured, and the policies’ effective periods.
 Although the certificate should not be
substituted for information contained in the
actual insurance policies, it is usually a reliable
source of information or proof of insurance
coverage.
Certificates are usually requested by opposite
parties in an agreement, contract, or transaction
to make certain the other party has the
appropriate insurance coverage.
Endrosement
 An endorsement is a document that incorporates amendments
and additions in the existing terms of the policy. It is a written
evidence of an agreed change to the policy.
 If the policyholder needs to purchase more coverage, add riders
or change the scope of the existing insurance policy, they can
approach the insurance company to make the required changes
by way of an endorsement.
 An endorsement can be issued at the time of purchase, mid-term
or during the renewal period

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Unit 4

 In the case of purchasing a vehicle with a loan,

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