1. WHAT CONSTITUTES A PROPOSAL / Four Conditions for a Valid Proposal / What are the ingredients of a valid proposal

For a proposal to be valid and capable of being accepted, it must meet these four conditions:

1.1. Intention to be a Proposal

• Explanation: The person making the proposal (called the proposer) must truly mean to make a proposal. This means they are serious and have thought about it.
• Example: If someone says, “Wouldn’t it be nice if you bought my car?” they might just be daydreaming. But if they say, “I am offering to sell you my car for $5,000,” they clearly intend to make a serious offer.

1.2. Completeness

• Explanation: The proposal must be clear and have all the necessary details. This means the person receiving the proposal (called the recipient) can understand exactly what is being offered without any confusion.
• Example: If you say, “I want to sell you something,” it’s too vague. But if you say, “I want to sell you my car, a 2015 Toyota Corolla, for $5,000,” it is complete because it includes what is being sold, the model, year, and price.

1.3. Communication

• Explanation: The proposal must be communicated to the other party. This means the other person must know about the proposal for it to be valid.
• Example: If you write an offer letter but never send it, the recipient cannot accept it because they don’t know it exists. You need to actually tell or send the proposal to the other person.

1.4. Unrevoked

• Explanation: The proposal must not be taken back or canceled before it is accepted. This means once you make the proposal, it should stay available for the other person to accept until you decide to cancel it.
• Example: If you offer to sell your car and the next day you change your mind and say, “I’m not selling anymore,” before the other person accepts the offer, the proposal is revoked. But if the person accepts your offer before you revoke it, then it is a valid acceptance.

💡 Summary:

• Intention: Be serious about the offer.
• Completeness: Provide all details.
• Communication: Make sure the other person knows about it.
• Unrevoked: Keep the offer open until it’s accepted, or you decide to cancel it.

2. WHO MAKES THE PROPOSAL

The person who wants to get insurance (called the proposed insured) is the one who makes the proposal. This is the person seeking to be insured.

• Details about how insured person can get in touch with the insurance company:
  • Invitation by Insurers: Sometimes, insurance companies (insurers) might invite people to apply for insurance. This could be through a letter, a phone call, or a meeting.
  • Through an Agent: An insurance agent, who works for the insurance company, might contact people to offer insurance. The proposed insured communicates through this agent.
  • Public Advertisement: Insurance companies might advertise their insurance plans to the public. People who see these ads and are interested can then make a proposal to the insurers.

💡 Summary: No matter how the proposed insured gets in touch with the insurance company—whether through an invitation, an agent, or an advertisement—the person wanting the insurance must submit the proposal.

3. HOW A PROPOSAL IS SUBMITTED

3.1. Normal Case

1. Proposal Form:
   • Explanation: The proposed insured must fill out a proposal form. This form asks for details like the person’s name, address, and the type of insurance they want.
2. Submission:
   • Explanation: After filling out the form, the proposed insured must send it to the insurance company.
   • Details: This can be done by handing it directly to the insurer, sending it by mail, or through an agent.
3. Insurer’s Decision:
   • Explanation: Once the insurance company receives the proposal form, they review it.
   • Details: The insurance company can either accept the proposal and provide the insurance, or decline it if they decide not to offer coverage.

3.2. Marine Cargo Insurance — A Special Case

Marine cargo insurance is a bit different from regular insurance. This type of insurance is for goods that are being shipped over water (like by boat or ship). Here’s how it works:

1. No Proposal Form:
   • For marine cargo insurance, there is no regular proposal form like other types of insurance.
2. Using a Declaration Form:
   • Instead of a proposal form, the person who wants to insure the cargo (called the “proposed insured”) fills out a “declaration form.”
   • This form is used because at the time of filling it out, the proposed insured might not yet own the goods or have an insurable interest in them. Insurable interest means having a financial stake in the goods that would cause the proposed insured to suffer a loss if the goods were damaged or lost.
3. Submitting the Declaration Form:
   • The proposed insured submits the declaration form to the insurance company.
4. Insurer’s Decision:
   • The insurance company reviews the form and decides whether to provide insurance coverage for the cargo.

💡 Summary: For most insurance types, the proposed insured fills out and submits a proposal form. In marine cargo insurance, a declaration form is used instead. The insurance company then reviews the form and decides whether to accept or decline the proposal.

4. USUAL CONTENTS OF PROPOSAL FORMS

4.1. Description of the person who wants to get insurance.

This section is about basic information of the person or entity that wants the insurance. It usually asks for:

• Name: What is your name?
• Address: Where do you live, or where is your business located?
• Occupation: What do you do for a living?

4.2. Description of the Risk Proposed to be Insured

This part depends on what kind of insurance you are applying for. It asks for details related to the specific type of insurance:

• Personal Accident Insurance: You might need to provide your age, weight, and height.
• Property Insurance: You will have to describe the property you want to insure in detail.
• Liability Insurance: You need to explain the situations that might lead to you being liable for something, like how your business operates or what kind of activities it involves.

4.3. Description of Circumstances Affecting the Risk

These questions are about any special conditions that might make the insurance riskier than usual. Again, these depend on the type of insurance:

• Personal Accident Insurance: Questions about your current and past health, and any physical issues you might have.
• Property Insurance: Details about the building where the property is located and any safety measures in place.
• Liability Insurance: Information about your location, the nature of your business, the equipment you use, or the number of people you employ.

4.4. Previous History of the person who wants to get insurance.

This is divided into two parts:

1. Experience of the person who wants to get insurance.:
   • Have you ever experienced a loss due to the risk you want insurance for?
   • Have you ever been in a situation where you could have experienced such a loss?
2. Relations with Other Insurers:
   • Have you ever applied for similar insurance with other companies?
   • Was your proposal ever declined or accepted with a higher premium?
   • Has any of your previous policies been canceled or not renewed?
   • Have you ever made a claim under a similar policy?
   • Are you currently insured with other companies, or planning to be?
   • Is this new insurance meant to replace other insurances or to add more protection?

e. Declaration regarding the Statements Made in the Proposal

At the end of the form, there is a declaration. This is where you agree that all the information you provided is true. You also agree that these answers will be used for the insurance of an agreement.

By filling out this form accurately and honestly, you help the insurance company understand the risk they are taking and decide how to cover you.