Cover note in the Contract of Insurance

Author : VS Warrier
A Cover note is an interim receipt issued by the insurer. It is temporary in nature. in practice on making the proposal, the insured company on payment of premium gives a deposit receipt called Cover note. It is also called an Interim Protection Note. It contains the same terms and conditions as that of the future policy to be issued in favour of the insured. It is issued in non-marine and non-life insurances. Generally it is in regular practice in fire, burglary and motor insurances. It is purely for temporary period, viz. 15 days or 30 days. It is a well established commercial practice.

Object of Cover note is to give interim protection to the assured pending decision of the Board of Directors of the Insurance Company. Insurers of non-life policies normally empower their agents to grant cover notes valid at the most for a short period of 15 or 30 days, after satisfying themselves about the the acceptability of the proposal. Cover note has not been defined in the Insurance Act. But Section 145 (b) of the Motor Vehicle Act, defines a certificate of insurance which includes a cover note complying with such requirements as prescribed. Continue reading “Cover note in the Contract of Insurance”