Insurance Documents

The proposal form is the document a prospective insured completes to give the insurer the information it needs to decide whether to accept the risk and on what terms. It is the primary vehicle through which the applicant discharges the duty of disclosure, and the questions on it indicate what the insurer regards as material to the risk.

Many proposal forms contain a basis of contract (declaration) clause stating that the answers given are true and shall form the basis of the contract. Where such a clause exists, the answers are effectively converted into warranties — a breach (even innocent) can allow the insurer to avoid the contract, regardless of whether the untrue answer was material. Consumer-protection reforms in various markets have curtailed this, but the concept is still examinable.

A quotation is the insurer's statement of the premium and main terms on which it is willing to accept the risk. It is generally an invitation to treat / an offer to insure that lapses if not taken up within the stated period; it is not itself cover. A quotation is usually valid for a limited period (e.g. 30 days).

A cover note is a document providing temporary (interim) cover while the insurer finalises underwriting and issues the full policy. It is evidence that cover is in force for a short period (commonly 30 or 60 days) and can be cancelled by either party on notice. It is most often seen in motor and property classes.

A certificate of insurance is a document that evidences that a policy exists; it is legally required in classes where third parties or the public need proof of cover — chiefly motor (under the Motor Vehicles (Third-Party Risks and Compensation) Act) and work injury compensation / employers' liability.

For compulsory motor insurance, cover against third-party liability is not effective until the certificate of insurance is delivered to the insured. The certificate shows the persons entitled to drive, the permitted use, and the period of cover — it is what a driver produces to the authorities as proof of insurance.

Trap: a cover note and a certificate are not the same thing. A cover note gives ; a certificate is of cover. A cover note may serve as a temporary certificate for motor purposes, but a full certificate must follow once the policy is issued.