(1) Except in cases of a marine insurance cover, where current market practices do not insist on a written proposal form, in all cases, a proposal for grant of a cover, either for life business or for general business, must be evidenced by a written document. It is the duty of an insurer to furnish to the insured free of charge, within 30 days of the acceptance of a proposal, a copy of the proposal form.
(4) Where a proposal form is not used, the insurer shall record the information obtained orally or in writing, and confirm it within a period of 15 days thereof with the proposer and incorporate the information in its cover note or policy. The onus of proof shall rest with the insurer in respect of any information not so recorded, where the insurer claims that the proposer suppressed any material information or provided misleading or false information on any matter material to the grant of a cover.
or in writing or by the completion of a printed proposal form supplied by the insurer. So proposal has to be in writing or confirmed in writing and can not be oral alone.
These proposals are called as applications for insurance in USA, and the Britishers call it Proposal Forms. One who seeks cover is the proposer. The proposer must have a property, which may be at risk or he or she may have dependents who will suffer financial loss at his or her death.
General Insurance deals with property and liability risks (also humans – Personal Accident & Health Insurance). From some event the organizer of the event or the owner of a property or a contractor at a situation may incur a legal liability to others from injury to them. These others are called third parties because the two parties to the contract of insurance are the insured and insurer.
The seeker of cover or protection must furnish accurate and truthful answers to the many questions contained in the Proposal Form. The proposal form will be similar for most property risks, but may differ depending on certain special adverse features of the risk.
Material facts disclosed in a proposal form Some common questions, which occur in all proposal forms, and also particular questions, which relate to specific risks.
A typical property insurance proposal form will, inter alia, include the following common information, which is sought:
(1) Name, address, telephone number, and other personal identification details
(2) The situation of the property
(3) Proposer’s profession
(4) Previous and present insurance
(5) Loss experience
(6) Sum insured
(7) The contents on the premises in the location.
(8) The type of property mentioning whether hazardous, non-hazardous and extrahazardous.
(9) The type of fire protection available.
(10) The proportion of ownership of others in the property at risk, in other words, specifying the interest of mortgagee like banks or lessees.
(11) The nature of adjoining risks, say, what are the people who are the applicant’s immediate neighbours doing.
(12) The value at risk or the sum proposed for insurance or as is generally known as sum insured. The proposal form generally ends with a declaration to be signed by the proposer. In this the proposer must declare that whatever information he has provided is true to the best of his/her knowledge. Such a declaration becomes the basis of the insurance contract. Every proposal form must also be dated.
Proposal for Non-Marine Insurance Generally in non-marine insurance, the applicant is required to fill a proposal form containing important questions for the purpose of risk assessment. The applicant declares at the end of the form and warrants that all information stated in the proposal form are true to the best of his knowledge. The proposer agrees that the answers to the questions in the form would be the basis of the insurance contract. The material facts disclosed in the form are assumed to remain constant, till the day the contract comes into existence. Any change before this date must be brought to the notice of the insurer to get the offer re-approved.
When the insurance contract comes into being on the basis of the statements recorded in the proposal form the insurer can avoid liability, if any of the above statements are found
untrue. (underwriter should ensure that none of the questions are left blank or just put ‘---’. Otherwise, in case of dispute, it will be construed in favour of the insured in case of a disputed claim)
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