The broker will prepare a slip upon receipt of instructions to insure from shipowner, merchant or other proposers. Proposal forms, so common in other branches of insurances, are unknown in the marine insurance and only the ‘slip’ so called ‘the original slip’ is used for the proposal.
The original slip is accompanied with other material information which the broker deems necessary for the purpose.
The brokers are expert and well versed in marine insurance law and practice. The various kinds of marine proposals are altogether too diverse, so elaborate rating schedule are not possible and the proposals are considered on individual merits.
The original slip is presented to the Lloyd’s Underwriters or other insurers or to the Lead of the insures, who initial the slip and the proposal is formally accepted.
But the contract cannot be legally enforced until a policy is issued. The slip is an evidence that the underwriter has accepted an insurance and that he has agreed subsequently to sign a policy on the terms and conditions indicated on the slip.
If the underwriter should refuse to issue or sign a policy, he could not legally be forced to do so.
The premium is determined on assessment of the proposal and is paid at the time of the contract. The premium is called consideration to the contract.
(d) Issue of Policy
Having effected the insurance, the broker will now send his client a cover note advising the terms and conditions, on which the insurance has been placed.
The broker’s cover note is merely an insurance memorandum and naturally has no value in enforcing the contract with the underwrites.
The policy is prepared, stamped and signed without delay and it will be the legal evidence of the contract. However, after issue of the policy the court has power to order the rectification of the policy to express the intention of the parties to the contract as evidenced by the terms of the slip.