Acceptance of the proposal form by the insurer under insurance law

  

Date Posted: 11/30/2011 7:56:36 AM

Posted By: Raychelle  Membership Level: Silver  Total Points: 184

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Acceptance of the proposal form by the insurer is a sign that the contract of insurance is complete.This may be in various ways.

1.Issue of the policy.
As a general rule issuance of the policy is conclusive intimation of acceptance of the proposal.The policy becomes effective on the date of issue notwithstanding any defects in the proposal form.
In McElroy v London Assurance Corporation[1894]24 Lloyds 287,the proposer had not signed the form but the insurer issued a policy.In a subsequent attempt to cancel the policy on the grounds of the defect failed.It was held that the policy was binding as its issue was evidence that the company had studied and considered and accepted the proposal form.

2.Formal communication.
This is an express intimation to the proposer by the insurer that he has accepted the proposal form.

3.Acceptance of the premium.
Acceptance and retention of the premiums raises the presumption in the absence of any circumstances leading to the contrary conclusion that the insurer has acceptea the proposal form.
In that case the insurer will be bound to accept the policy and make good any particular loss.

4.Conduct of the insurer.
Evidence may clearly show that a proposal form has been accepted and there is a binding agreement between the parties.This would be if the insured is paying premiums and the insurer issued the policy.

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