What Is a Cover Note Definition and How It Works With Insurance

A cover note is a temporary document issued by an insurance company to provide proof of insurance coverage until a final policy is issued. It differs from a certificate of insurance or policy document in that it includes the name of the insured, the insurer, the coverage, and what is being covered. The term "cover note" is commonly used outside of the United States.

The purpose of a cover note is to give individuals proof of insurance while the insurance paperwork is being processed. During this time, the insurer evaluates the risks associated with insuring the holder of the cover note. The cover note serves as proof of coverage until the policy documents and certificate of insurance are issued. The level of coverage provided by the cover note is generally the same as the full insurance policy, but some restrictions may apply while the insurer determines the risks involved.

The validity of a cover note depends on how quickly a new policy is created and whether there are any issues with the policy coverage. If the cover note expires before the permanent policy documentation is received, the insured individual can request an extension. In some cases, insurance companies allow individuals with only a cover note to cancel the purchase and receive a refund, as long as no claims have been made during the cancellation period.

In summary, a cover note is a temporary document that gives proof of insurance coverage until a final policy is issued. It allows individuals to have coverage while the insurer evaluates the risks. The cover note remains valid until the policy documents are issued or denied.