Proposal Forms
Overview
Before any insurer will cover you, it wants to know exactly who you are, what you own, and what you are asking it to carry. It gathers all of that on one printed sheet: the proposal form. It looks like an ordinary application, yet the small print at its foot quietly turns every answer you write into a promise, and that promise decides whether your claim is ever paid.
In this lesson you will learn what a proposal form is, the five kinds of information it collects, and the work it does for the underwriter who prices your risk. You will see how it puts the duty of disclosure into practice, why the declaration at the bottom matters more than anything above it, and the exact mistakes on a form that let an insurer walk away from a claim.
Objectives
- Define a proposal form and describe the information it gathers
- Explain the functions and uses of a proposal form in the underwriting process
- Explain how the proposal form gives effect to the duty of disclosure
- Describe the legal status of the proposal form once the contract is concluded
Lesson Note
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Lesson Evaluation
Congratulations on completing the lesson on Proposal Forms. Now that youve explored the key concepts and ideas, its time to put your knowledge to the test. This section offers a variety of practice questions designed to reinforce your understanding and help you gauge your grasp of the material.
You will encounter a mix of question types, including multiple-choice questions, short answer questions, and essay questions. Each question is thoughtfully crafted to assess different aspects of your knowledge and critical thinking skills.
Use this evaluation section as an opportunity to reinforce your understanding of the topic and to identify any areas where you may need additional study. Don't be discouraged by any challenges you encounter; instead, view them as opportunities for growth and improvement.
- The document a person completes to apply for insurance cover is the: A. Cover note B. Policy document C. Proposal form D. Renewal notice Answer: C
- The person who completes a proposal form is known as the: A. Underwriter B. Proposer C. Broker D. Actuary Answer: B
- The clause at the foot of a proposal form that makes every answer a warranty is the: A. Arbitration clause B. Average clause C. Basis of the contract clause D. Excess clause Answer: C
- A proposal form gives effect chiefly to the principle of: A. Indemnity B. Utmost good faith C. Contribution D. Subrogation Answer: B
- Which of the following is NOT normally a function of a proposal form? A. Supplying information to the underwriter B. Helping to fix the premium C. Paying the claim to the insured D. Providing a record of what the proposer disclosed Answer: C
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Past Questions
Wondering what past questions for this topic looks like? Here are a number of questions about Proposal Forms from previous years
Question 1 Report
(a)(i) What is a proposal form?
(ii) List four general questions that are contained in a proposal form.
(b) List and explain three documents used in effecting insurance contracts.