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Insurance Policy Forms: Meaning and Structure
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Insurance Policy Forms: Meaning and Structure

Policy forms

The policy is a document which provides evidence of the contract of insurance. This document has to be stamped according to the provisions of the Indian Stamps Act. In fire and miscellaneous insurance, the policy form is used on a scheduled basis. The scheduled type of form consists

  1. The Heading: Name of the insurer and its registered address.
  2. The recital clause: This section introduces or recites the parties to the contract. That is the insurer and the insured.
  3. Operative or insurance clause: the section mentions the perils insured under the policy and the circumstance which the insurer will become liable to make payment the insured. In this clause a reference about the sum insures or other liability limit is also mentioned,
  4. Schedule: This part includes all he typewritten information applicable to the particular contract, for example in fire insurance the following information is provided in the schedule.
  • Insured and Address
  • Policy Number
  • Date of issue
  • Agency
  • Risk Covered
  • Period of Insurance
  • Property Insured
  • Rate
  • Premium
  1. Conditions: Majority of policies contain conditions. These are printed on the policy. There are express conditions which are necessary to0 regulate the contract. Express conditions serve various purposes. E.g. Condition for cancellation of policy.
  2. Warranties: Along with express conditions there are express warranties which are incorporated in the policy E.g.: express warranty stated in marine policy –warranted that the goods are packed in double gunny bags.

If warrant becomes breached, the policy becomes voidable at the option of the insurer.

  1. Cover Notes: These are issued when the negotiations for insurance are in progress and it is necessary to provide cover on a provisional basis or when the premises are being inspected for determining the actual rate applicable. The cover note is temporary and stands cancelled when the policy is issued.
  2. Certificate of Insurance: A certificate of insurance is issued to satisfy the requirements of the insured or the banks in respect of each declaration made under an open cover and or an open policy. Under the Motor Vehicles Act, a certificate of Insurance Is required to be issued in addition to the policy. In marine Insurance certificates of insurance are issued to provide evidence of cover on shipments insured under cargo open cover or floating polices.
  3. Renewal notice: The insurer issue a renewal notice one month in advance of the date of expiry, inviting renewal of the policy.
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