Cover note is the name used to describe the temporal insurance cover extended to the
proposer by the insurer during the interim period between submission of the proposal
form and its formal acceptance or rejection.
It is a legally binding contract between the parties. It may be a formal agreement or a letter
from the company stating that cover has been extended. If loss arises during the currency of
the cover note the insured generally recovers as if he had a policy in force or in accordance
with the terms of the cover note. It is generally effective for 30 days.
In Juliet Praet V. HG Polland Ltd, Pearson J observed that cover note covers the
assured and posts the undertakers on risk for the period while the proposal is being
considered and until a policy is either granted or refused. The assured is therefore entitled to
enforce the contract contained in the cover note provided he has complied with its
conditions, such as payment of the premium.
Issuance of a cover note may be justified on the following grounds:
(i) It is argued that the insurance industry is formal and certain stages have to be
followed before a policy is issued.
(ii) It extends immediate over to the proposer.
(iii) It affords the insurers sufficient time to access the risk.
maurice.mutuku answered the question on May 1, 2018 at 12:14
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