The Proposal Form

Having found the policy you want, the next step is to fill out a proposal form. This is the application form for a particular policy and it will ask you for all sorts of details which the insurer needs in order to decide whether or not to cover you and how much to charge. Care taken at this stage can prevent problems later.

The length of a proposal form and the questions asked varies from one type of insurance to another, and from one company to another. Perhaps the key feature is the declaration that you usually have to sign at the end confirming that the answers are true and that no 'material fact' has been left out. A 'material fact' is anything which the insurer would want to take account of in making a contract with you. You are in the tricky and somewhat unfair - position of having to read the insurer's mind to decide what they might consider 'material'. And if you fail to disclose something which does turn out to be material, the whole insurance contract could be void. In practice, most insurers would refuse to pay out on a claim only if the undisclosed material fact was relevant to the particular claim - for example, a permanent health insurer might refuse to pay out if you became disabled through taking part in winter sports and you hadn't told them that this was something you did from time to time.

A few insurers have revised their proposal forms and now ask you only to give the information specifically asked for on the form; as long as you answer those questions fully and truthfully, you don't need to volunteer any other details about yourself. But most insurers still have the 'material facts' statement and you'll have to tell them about anything that could be relevant - if you're unsure about whether to disclose something, err on the side of caution and tell the insurer anyway.


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Insurance Brokers Continued

From 1989, other intermediaries, if they sell the insurance of companies which belong to the Association of British Insurers (A BI ), must display a certificate saying that they'll abide by a new code of conduct which the ABI has drawn up, and they must have PI insurance to the same level as registered brokers, though there's no grants scheme or compensation fund. The insurance company (or companies) will be responsible for the action of intermediaries who act as their agents, but not those of independent intermediaries. And intermediaries who sell the policies of non-ABI companies won't have to abide... see: Insurance Brokers Continued


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