The Proposal Form – Reading it once

    What is a Proposal?

    Simply put, it means an “application”. When a ‘proposer’ fills in a ‘proposal form’ and hands it in to an insurance company, they are submitting an ‘application’ to the insurer requesting insurance.

    A proposal is a written statement wherein a customer gives information about themselves – details pertaining to assets, income, age and other personal information as per the insurer’s requirement. This proposal is then used by the insurer to decide whether to accept the risk or decline it, if the risk is to be accepted then what premium should they ask you to pay.

    If the customer/ proposer gives false or misleading information then insurance company has every right to cancel the policy and / or decline the claim or both. Hence, it is important to be truthful in a proposal form.

    Generally, most agents, middlemen, vehicle dealers and the touts (the usage of the word tout is deliberate), anxious to earn quick commissions, tend to tell the prospective customer “Don’t worry, sir! We will fill in the application form. All you need to do is sign on the dotted line!”

    We could blindly sign the application, but any false information may result in the insurer declining a claim when we most need it. This happens despite there being many legal provisions about the duties of agents, brokers and other middlemen. We strongly advise you read the application at least once to ensure the information being provided to the insurer is true.

    Motor Insurance:

    Unfortunately, at present, the proposal for motor insurance (this insurance is compulsory) is only available in English not in vernacular languages! Further, most of the insurance terminology used in the application is not explained! Therefore, it is important that you read the application you are filling in, and understand it.

    In India, claims are often rejected by the insurer and the customer is left to fend for himself. Over the years, there have been hundreds of court cases arising from this.  We emphasise this in the case of motor insurance since it is compulsory, where as other insurances, such as life insurance are entirely voluntary.

    In other words, the owners of a motorcycle or a car or any other motorized vehicle are told by the law that it is imperative to insure their vehicle. Reading the proposal form at least once before signing it, to ensure accurate information, alone can solve many potential problems which could arise later.


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