How Insurance Cover Notes used in Policies

Insurance cover note is a document used to provide evidence of insurance if policy documents are not immediately available it issue as a temporary cover during negotiation period pending finalization of the matter.

Since preparation of a permanent policy might take some time and since pending issuance of the policy insurers might like to make further queries pertaining to the risk or proposed insurance, it has become a common practice for insurers to issue a temporary cover during negotiation period pending finalization of the matter.

The cover may be given either by a letter or through a standard cover-note form. The cover is usually given for 15 days or 30 days and the period is mentioned on the document.

The issuance of such a temporary cover does not put the insurers under an obligation to enter into a permanent contract.

It is also indicated that if the insurers are to enter into a permanent contract, it would be as per insurers’ standard form of policy used for that class.

The information that would usually appear on a cover note is;

  1. Name, address and occupation of the insured.
  2. Sum-insured and provisional premium.
  3. Date and time of the commencement of cover.
  4. Duration of cover,
  5. Scope of cover, i.e., perils covered,
  6. Description of the property or subject-matter covered.
  7. Cancellation provision which provides that either of the parties may cancel the cover by giving a written notice within a prescribed time.
  8. A statement usually appears at the bottom of the cover note indicating that the insured is held covered as per usual terms and conditions of the company’s standard policy form used for this class of business,
  9. Signature and date of insurer.

The student should note that a motor cover note will contain some additional information, as is required by law, such as,

(a) use of the vehicle,

(b) registration number of the vehicle and

(c) a certificate from the insurer to the effect that the cover has been given in accordance with the provision of the Motor Vehicles Act, 1939.