Procedures for insurance contract - SS2 Commerce Lesson Note

Inquiry: The insurance process usually begins with an inquiry. This is when a person or entity expresses interest in obtaining insurance coverage. They approach an insurance company or agent to gather information about the types of insurance available, coverage options, and premiums.

Proposal Form: Once the individual or entity decides to proceed with insurance coverage, they are required to fill out a proposal form. The proposal form is a document provided by the insurance company that asks for relevant information about the applicant. It includes details such as personal information, the nature of the risk to be insured, and any existing insurance policies. The purpose of the form is to assess the risk involved and determine the appropriate coverage and premium.

Premium: The premium is the amount of money that the insured person or entity pays to the insurance company in exchange for coverage. It is usually paid annually or in installments. The premium amount is determined based on factors such as the nature of the risk, the coverage amount, the applicant's age or health condition (if applicable), and the insurance company's assessment of the risk. The premium payment is essential to keep the insurance coverage active.

Cover Notes: After the proposal form is submitted and the premium is paid, the insurance company may issue a cover note. A cover note is a temporary document that provides immediate coverage until the actual insurance policy is issued. It serves as proof of insurance until the policy is finalized and delivered. Cover notes are especially useful when there is an urgent need for insurance coverage, allowing the insured to have some protection while the formalities are being completed.

Insurance Policy: Once the insurance company has reviewed the proposal form and collected the premium, they issue the insurance policy. The insurance policy is a legal contract between the insured person or entity and the insurance company. It outlines the terms and conditions of the coverage, including the scope of coverage, exclusions, deductibles, and claim procedures. The policy specifies the rights and obligations of both parties and serves as a reference in the event of a claim.