The transition from paper to digital hat has changed in many ways both the format and the understanding of what a proposal form is in the area of auto insurance. Before the Internet, people had to fill out a proposal form to get auto insurance, often after first receiving a verbal quote.
Nowadays, insurance companies have pushed the whole mechanism to get auto insurance online and people have had to fill in a lot of information, often on multiple screens, in order to get an auto insurance quote and to get the cover itself. The difference is that many people often view online questions more like a questionnaire than a legal document, which is actually what it is.
It is worth understanding the context of a proposal form, whether paper or digital, since any error or misinformation can invalidate the insurance policy and allow the insurance company to deny any responsibility in the payment of future credits.
A proposal form is the basis on which the insurance company obtains information on a potential client, which allows him to assess a risk and decide whether to accept it or not, and if so, according to which terms and at what cost. The proposal form will include a series of questions aimed at obtaining information that the insurance company believes it needs to know to assess the risk.
What is often not included in a proposal form is that the potential client has an obligation to disclose any information that may be relevant to the insurance company in order to make this assessment. This is independent of whether there are questions about the information or not. This principle in terms of insurance is known as the greatest good faith. It is up to the prospect to disclose all of the information that an insurance company could reasonably expect to be relevant.
A proposal form will often consist of several parts, with different subsections based on specific responses. An obvious example would be that of automobile beliefs. If the question is asked whether or not the policyholder already has automobile convictions, this will normally be a simple yes or no answer to begin with. If the answer is no, the policyholder proceeds to another question. If the answer is yes, the policyholder is normally given the opportunity to provide details about these beliefs.
This is a fairly obvious example where information is important for the insurance company to have complete and direct details. If the prospect or the insured person provides incorrect or misleading information, this may affect the judgment of the policyholder. Previous convictions can be a good indicator of a person’s attitude toward driving and the restrictions imposed, such as speed limits.
Some people will provide false information in the hope that they will not be able to find it, although it is a dangerous and risky premise. Normally, people will provide incorrect information either because they do not remember things correctly, or because some information is too old or outdated to be relevant. Again, this is risky as it can invalidate their policy.
One thing to remember is that insurance companies normally only check the details provided in the application form when the policyholder has to file a claim. If no claim is made, the insurance company does not normally worry. If a complaint is made, they will verify that all the information contained in the written proposal form is correct and, if not, could offer them the opportunity to reject the complaint and to deny any responsibility under the policy.