Insurance

Insurance

Types
1. Indeminity
  1. property insurance or short-term insurance.
  2. Insured recovers only his actual financial loss.
    1. Cash or replacement determined after event occurs, ltd to loss suffered
      1. Insured must be have position before insured event restored
      2. Extent of damage
  3. Right of contribution
    1. When Insured is covered for same risk by other insurer(s)
      1. Insured can claim from ONE, and the insurer can require contribution from others
  4. Right of Subrogation
    1. Insured cannot claim from insurer and 3rd party
      1. Insurer has right to sue 3rd party who caused insured loss
        cannot exercise right unless it has settled insured’s claim
  5. Insurable interest must be present at time of taking policy AND time of Loss
2. Non-Indemnity
  1. Insurer pays insured or named beneficiary
    1. a Pre-determined sum upon occurance of insured event (risk)
      1. Amt not related to risk, not ltd to loss
        Benefits not available for paying debts
        for 5 years from payout
        Benefits and assets Capped at R50000 or as prescribed by minister
  2. Insurable interest need only exist at time of policy
Elements
1. Insurer: collects premiums from
  1. Obligation to pay sum of money for valid claim
    1. Refuse:
      1. false claim
        Exaggeration, Fabrication, Self inflicted loss
      2. Insurer failed to honor oblig (warranties)
      3. Made material misrep / non disclosure in negotiations
      4. filed claim out of time
2. Insured: to protect from loss of
  1. Insurable Interest
    1. Risk (event covered): from a specified future event known as the risk or peril
      1. gives rise to insurers obligation
        Risk and asset should be properly described, circumstances affecting both (conditions)
    2. Stands to suffer or lose if risk occurs
  2. Obligation to pay agreed premium
    1. Contract provides amt, manner and intervals at which it is to be paid
      1. Not necessary for 1st premium to be paid before contract is effective
        BUT insurer may not honor claim until its paid or deduct from payout
Insurance=intention of the insured is to protect from financial losses causes by specified uncertain event.
1. Wager =parties intend to obtain financial gain from happening of specified uncertain event.
  1. Not enforceable
Sources of Law
1. LongTerm Insurance Act of 1998*.
  1. Short Term Insurance Act 53 of 1998*
    1. Common Law and Trade practice
Intermediaries
1. Agent
  1. On behalf of the Insurance co.
    1. liability to their customers is administrative
2. Broker
  1. Obo Insured to secure adequate coverage
Duty of Goof Faith and Disclosure in negotiations
1. Parties obligated to display good faith and disclose MATERIAL facts
  1. Breach = Contract voidable at instance of innocent party
    1. Materiality test = ask reasonable man
      1. whether the information not disclosed was reasonably relevant to the risk and to the assessment of the premiums. = YES = Material
        Cannot rely on Nondisclosure
        Already known
        Matter of general public knowledge
        Should be aware of in the course of its business
        Expressly/ Implicitly waived the right to be informed
        Insurer may be precluded by estoppel from relying on misrepresentation / nondisclosure, after discovering such and it acts in a manner inconsistent with avoiding the contract.
        Insurer mus prove materiality of misrepresentation
        Effect:insurer may only set aside contractual obligations if it would not have contracted
        If company would have contracted at a higher premium = insured should increase premiums.
        e.g Dangerous occupation, extreme sports
        liability of insured would be greater than normally expected
        facts that show insured is likely to cause the risk to materialise through her/his own culpable conduct
        Effect of non disclosure
        Valid until election. Contract voidable at instance of insurer.
2. Terminates when contract = concluded
  1. Disclosure must be made on each renewal
Contract
1. Insured must be informed of right to choose insurer
  1. Insured attention should be drawn to provisions that limit liability of insure
    1. Mus be in plain language, clear and comprehensible
2. Insurer can cancel/cool of within 30days of receiving policy summary, and no benefits paid
  1. Insured who entered a contract as a result of direct marketing has a 5 business day cooling of period
  2. Summary must be sent w.i 60days of conclusion
3. Terminated when
  1. Expiry of agreed period of insurance
    1. Mutual Agreements
      1. Cancellation due to breach
        Prescription
        Supervening impossibility of perf. and waiver

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	Created by jennysalex about 11 years ago