Page 64 - DCOM309_INSURANCE_LAWS_AND_PRACTICES

Unit 4: Contract of Insurance

In Marine Cargo Insurance, Insurance document is not the practice to use a proposal form, Notes
although sometimes it is usual to obtain a questionnaire or a declaration form duly completed.
Proposal forms are used for hull insurance.
In Fire Insurance, the practice varies among the companies, proposal forms are not generally
used for large industrial risks where inspection of the risk is arranged before acceptance of the
risk. Forms are used for simple risks. Proposal forms are used in respect of risks which are
normally declined but have to be accommodated to retain the goodwill of the client.

In Miscellaneous Insurance, proposal forms are invariably required and they incorporate a
declaration which extends the common law duty of good faith. Fire proposal forms may or may
not have the declarations. The following items may be considered as common to all proposal
forms.
1. Proposer’s name in full

2. Proposer’s address
3. Proposer’s profession, occupation or business
4. Previous and present insurance
5. Loss experience

6. Sum insured
7. Other Sections – Signature, date, place, etc.

Policy Form

Policy forms, like proposal forms, vary within wide limits as between different classes of
insurance but they have certain features in common. The policy is a document which provides
evidence of the contact of insurance. This document has to be stamped in accordance with
provisions of the Indian Stamp Act 1899. Where the insurance is governed by a Tariff or a market
agreement, the policy wording is prescribed therein it and it is obligatory for insurers to use
these wordings. In fire and miscellaneous insurance, the policy form used is on a scheduled basis
i.e. all individual details relating to a particular insurance are grouped together in a schedule.
Generally speaking policies are divisible into certain well defined sections and these are as
follows:
1. Recital Clause or Preamble
2. Operative Clause

3. Attestation Clause
4. Conditions
5. Schedule

Cover Notes

A cover note is a document issued in advance of the policy. It is issued when the policy cannot for
some reason or the other, be issued straight away. Cover notes are issued when the negotiations
for insurance are in progress and it is necessary to provide cover on a provisional basis or when
the premises are being inspected for determining the actual rate applicable. Pending the
preparation of the policy, the cover note is issued as evidence of protection for a temporary
period of time and to prove that cover is in force. Here is a brief detail of cover.

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