The terms of cover notes

There is little English authority on the content and operation of cover notes. This type of document, traditionally used in the motor insurance market, grants the assured temporary cover pending a final decision by the insurers on the assured’s application. In China Ping An Insurance (Hong Kong) Co Ltd v Tsang Fung Yin, 19 March 2012, Hong Kong Court of First Instance, To J has confirmed that a cover note is a contract distinct from the subsequent policy but that it is unlikely that the parties intended the obligations of the assured under the two contracts to be at variance.

China Ping: the facts

On 1 June 2006 the defendant, TFY, completed a proposal to the claimant insurers, China Ping, for a motor policy for the period 1 June 2006 to 31 May 2007. The proposal stated that TFY agreed “to accept a policy in the Company’s usual insurance policy form this class of insurance.” On the same day the insurers issued a cover note to TFY, stating that “the risk is hereby held covered in terms of the Company’s usual form of THIRD PARTY ONLY Policy applicable thereto for a period of 30 days …”