INSURANCE LAW

Definition A contract between an insurer and the insured in terms of which the insurer undertakes, in exchange for the payment of a sum of money (the premium), to give to the insured a sum of money (or its equivalent) on the occurrence of a specified but uncertain future event in which the insured has some interest

Insurance vs Wagering What makes insurance different from a wager? A wager is unenforceable (contra bones mores) Insurable interest Intention Risk of loss (not self created)

Insurance legislation Long Term Insurance Act Short Term Insurance Act

Types of insurance Indemnity insurance Non-indemnity insurance

The 4 essential elements The insurers obligation to pay a sum of money or its equivalent The insured's obligation to pay the premium The occurrence of an uncertain future event An insurable interest

Duties Good faith Disclosure Brokers duty to advise disclosure Notify of loss Co-operation Mitigation of damages Not to impair subrogation rights To pay the premium

Insurable Interest The insured must have some kind of interest in the thing being insured Eg: economic interest This is what distinguishes the insurance contract from a wager or gambling

Indemnity insurance There is uncertainty as to whether the insured event will ever occur Eg: a hijacking, a car accident, a fire The amount of the loss (if any) is unknown at the time of taking out the policy The insured must have an insurable interest in what is being insured

Non-indemnity insurance It is certain that the event will occur – the only uncertainty is when Eg: a persons death The amount the insurer must pay is decided at the time the insurance is taken out & is not related to the loss The insured must have an insurable interest in the life of the person being insured

Good faith The concept of ubermae fides

Warranties Affirmative warranties Promissory warranties

Affirmative warranties A declaration Eg: Age last birthday Materiality

Promissory warranties A promise or undertaking Eg: The insured must arm the alarm system whenever leaving the property unattended Does not have to be material

Under & over insurance Over insured – no benefit to insured Under insured – insurer will apply average

Subrogation Places insurer in shoes of insured Allows insurer to sue in insured’s name Cannot benefit twice from your mishap

Some principles Right to repair, replace etc Excess clauses Multiple contracts