COVER NOTES / CERTIFICATE OF INSURANCE /POLICY DOCUMENT

 D) COVER NOTES / CERTIFICATE OF INSURANCE /POLICY DOCUMENT:

 

A cover note is issued pending preparation of the policy in the following circumstances:
a) Negotiations for insurance are on and it is necessary to provide cover on provisional basis.
b) When the premises are under inspection for determining the actual rate of premium 
c) Where the risk details are not complete (ex. Marine Cargo Insurance)
d) That it is a specialized risk insurers so far have not come across. A cover note is issued duly collecting provisional premium and policy would be issued on arriving at the correct rate of premium.
Cover note is not a stamped document. However, it is subject to the usual terms and conditions of the policy to be issued.Any warranty that is applicable would also be mentioned in the cover note.Similarly, if the insurance is subject to any clauses like Agreed Bank Clause, Declaration Clause etc. they are also mentioned in the cove note. 
Following are the general contents of a cover note:
a) Name and address of the insured
b) Sum insured
c) Period of insurance
d) Risk covered
e) Premium / provisional premium
f) Description of the risk covered (subject matter)
g) Serial number of the cover note 
h) Date of issue
Note: the validity of the cover note is usually for 15 days and can be extended up to a maximum period of 60 days. Cover notes are used predominantly in Marine and Motor insurances.
1. Marine Cover notes:
A marine cover would be issued in the following circumstances:
• If the details of the steamer, number of packages or exact value etc. are known-
• Having all details on hand but the cargo is not shipped in the named vessel due to lack of space. 
Policy would be issued on receiving the full information.

 

COVER NOTES II

A marine cover note contains the following wording:
• Marine cover note number
• Date of issue
• Name of the insured
• Valid up to
As requested, you are hereby held covered subject to usual conditions of the policy to the extent of Rs……..
a) Clauses:Institute Cargo Clauses (ICC) A, B or C including War and SRCC (strike, riot and civil commotion) risks as per institute clauses, but subject to 7 day’s notice ofcancellation.
b) Conditions: Policy is issued on receipt of all shipping documents. If any loss occurs prior to declaration and or shipment on board the steamer, insurer’s liability is restricted to the prime cost of the goods plus actual charges incurred.As far as inland transit insurance is concerned, the relevant data will be available in almost all cases. Therefore issue of cover note is very rare.
2. Motor Cover Notes: Cover notes in motor insurance are issued in prescribed format. The operative clause of the motor cover note reads as under: 
“The insured described in the form, referred to below, having proposed for insurance in respect of the Motor Vehicle(s) described therein and having paid the sum of Rs....as premium the risk is hereby held covered under the terms of the company’s usual form of......Policy applicable thereto (subject to any Special Conditions mentioned below) unless the cover be terminated by the Company by notice in writing in which case the insurance will thereupon cease and a proportionate part of the premium otherwise payable for such insurance will be charged for the time the company had been on risk”.
The Motor Cover Note generally contains the following particulars:
• Registration mark and number, or description of the vehicles insured / cubic capacity / carrying capacity / make / year of manufacture, engine number, chassis number.
• Name and address of the insured
• Effective date and time of commencement of insurance for the purpose of the Act. Time......, Date......
• Date of expiry of insurance
• Persons or classes of persons entitled to drive
• Limitations as to use
• Additional risks, if any
The Motor Cover Note incorporates a certificate to the effect that it is issued in accordance with the provisions of Chapters X and XI of the Motor Vehicles Act, 1938.
Important: The validity of a cover note is valid for 15 days and can further be extended for a period of 15 days at a time. However such extensions cannot exceed 60 days at any cost.
Note: the wording of cover note varies from insurer to insurer. However, use of cover notes is not resorted in many cases as the present day technology made it easy to issue the policy on the spot.

 

 

Payment of Premium

However, Insurance Rules 58 and 59 provide certain exceptions to this condition of advance payment of premium. Rule 58 speaks about bank guarantee.
If the insured arranges a bank guarantee for the premium to be paid, and if he did not pay the premium before the end of the next calendar month, then insurers can recover the premium from the bank. 
If insured arranges an advance deposit with the insurer sufficient to cover entire amount of the premium and if the insured did not pay the premium before the end of the month next succeeding to the month in which the risk is assumed, then the advance deposit would be adjusted (debited) towards the premium.
Rule 59: Certain relaxations in payment of premium are given in respect insurance policies issued to Government or semi-government organizations.

2) Method of payment of premium: Important:Insurers accept the premium in the following methods: 
1. Cash
2. By cheques, demand drafts, pay order, banker’s cheques drawn on any schedule bank in India;
3. Postal money order;
4. Credit or debit cards;
5. Bank guarantee or cash deposit;
6. Internet;
7. E-transfer
8. Direct credits via standing instruction of proposer or the policyholder or the life insured through bank transfers;
9. Any other method or payment as may be approved by the Authority from time to time
As per IRDA regulations, policyholder cannot arrange premium through net banking or credit/debit card unless they are issued in the name of the policyholder.