INSURANCE LAW B Com HRM

Why insure? To safeguard against legal liability To safeguard against loss of assets To safeguard against actions of employees Etc ….

Definition One party (the insurer) indemnifies the other party (insured) should a specified risk occur. In return, the insured undertakes to pay the insurer a certain sum of money (the premium)

Types of insurance Indemnity insurance Non-indemnity insurance

Indemnity insurance An undertaking by the insurer to compensate the insured for a specified financial loss that may or may not occur. If specified event occurs, the insured is reimbursed the acutual patrimonial loss

Non-indemnity insurance An undertaking by the insurer to compensate the insured for a specific amount on the occurrence of a specified event

Insurance legislation Long Term Insurance Act Short Term Insurance Act

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

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 Requirements: Valid & enforceable policy contract Insurer must have indemnified insured Insurer must have fully compensated the insured