The key information in a standard proposal form are as follows

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Proposal Form

This is the application form, which has to be filled in by a person wishing to take out insurance. All details about the person and the risks to be covered have to be filled in truthfully in the proposal form.

The key information in a standard proposal form are as follows:

     1. The name and address of the insurance company

      2. A clear statement of the type insurance cover offered by the insurance company, including any 'extensions' to the policy

     3. Questions designed to elicit facts concerning:

     (i)  the proposed assured or the property to be insured

     (ii) the nature of the risk

      (iii) the circumstances affecting the risk

      (iv) the insurance record of the proposed assured

The proposer has to answer all these questions TRUTHFULLY.

      4.  A statement of declaration by the proposer that all the statements contained in the proposal form are true and correct and that he has not concealed, misrepresented or mis-stated any material fact.

       5.  The signature of the proposer

       6.  The date the proposal is signed

The functions of the proposal form are as follows:

(a) An application form for insurance coverage by the proposer (customer). It is not a contract of insurance. It is an offer from the proposer to the insurance company to buy insurance coverage.

(b) The facts disclosed in the proposal form helps the underwriter to study the risk so that he can decide on:

  (i) whether or not to accept to give insurance coverage to the proposer. After studying all the information given, the insurance company may consider him a bad risk and refuse to accept the proposal.

          (ii) the amount of premium to be charged.

(c) The proposer will also know:

          (i) exactly what type of cover he would get should he suffer a loss

          (ii) the instances when he would not be covered. (the exclusion clause)

          (iii) his own liability in the event of a loss (such as the "excess" clause in motor insurance policy)

(d) The proposal form provides documentary proof of what the proposer has disclosed about the property/person insured. If it is subsequently proven that what is written there is not true, then the insurance company can refuse to pay when a claim for loss is made. This is because the insurance contract is based on ‘utmost good faith'. It can be declared null and void if one of the parties is not acting in 'good faith', that is, he has lied or misrepresented or concealed the material facts.