LML4805 Insurance Law – Exam Pack Summary and Definitions (University Module – Comprehensive Exam Preparation Material)

LML4805
EXAM PACK

, EXAM PACK


DEFINITIONS

Distinguish (in a single sentence, where possible, and with the aid of
examples, where necessary) between:

QUESTION 1:
The insured and the person concluding the insurance contract with
the insurer
• the person taking out the insurance (ie, the person
concluding the contract with the insurer) A may insure his
or her own interest in his or her own house. A may insure
his or her own interest in B’s house. A may insure B’s
interest in his or her own (A’s) house, or in B’s house, or in
C’s house.
• the insured is the person who enjoys protection in terms of
the policy and he is the 1 st holder of the policy.


QUESTION 2:
The insured, the life insured and the beneficiary in terms of a life
insurance contract;
• the insured is the person who enjoys protection in terms of
the policy and he is the 1 st holder of the policy.
• The life insured is the person whose life is insured
• The beneficiary is the person who will benefit from the
policy

John insures his wife Mary’s life and names his daughter Grace as
beneficiary


QUESTION 3:
A void and a voidable insurance contract
• void: no contract comes into existance because it excludes
one of the basic requirements
• voidable: a valid contract comes into exitsnance but may be
terminated or enforced at the will of the innocent party

QUESTION 4:
Fire insurance and marine insurance;
❖ Marine insurance; is a contract of indemnity and is aimed at
providing the insured with indemnity against his loss caused
to the owners of ships

, ❖ Fire insurance: the insurer will be liability in terms of
indemnity insurance for loss caused by fire damage
Look at the nature of he event insured against



QUESTION 5:
Positive and negative misrepresentation by an insured;
❖ Positive misrepresentation: insured makes a positive
incorrect statement about a material fact

❖ Negative misrepresentation: insured fails to disclose a
material fact to the insurer

QUESTION 6:
A limitation on risk and an exception to risk in an insurance contract
❖ A limitation on risk : the insured has the onus to prove the
event was caused by the event insured against and not the
excluded clause: must prove death – and exclude suicide as a
cause of death

❖ An exception to risk in an insurance contract: insurer must
prove that the event was caused by the execption = death was
caused by suicide


QUESTION 7:
The objective and the subjective test for the materiality of facts
❖ The IR proves that IT seee the fact as material = subjective
test
❖ Reasonable person would consider the fact to be material =
complete OBJECTIVE TEST (Mutual and Federal Case)

QUESTION 8:
An insurance contract and an insurance policy.
❖ An insurance contract: An insurance contract is a tangible
agreement

❖ An insurance policy: The policy is the reduction of that
agreement into a tangible form.

QUESTION 9:
A cover note and an insurance policy;
❖ An insurance policy: The policy is the reduction of that
agreement into a tangible form.

❖ A cover note: document issued by the insurance company
giving temporary insurance until a formal policy is issued

, QUESTION 10:
Indemnity insurance and capital (non-indemnity) insurance;
❖ Indemnity insurance: the contract between the parties –
insurer will indemnify the insured for patrimonial loss/
damages as a result of the happening of the event insured
against. Purpose of the contract: restore the insured to the
position he occupied before. The insured isn’t allowed to
make a profit out of his loss. Interests insured against are
patrimonial.


❖ Capital insurance: insurer undertakes to pay a specified
amount to the insured on the happening of the event insured
against. The interest is non-patrimonial.

QUESTION 11:
The object of insurance and the object of the risk;
❖ Object of insurance: The object of insurance isn’t a physical
object but an interest the insured wants to protect by the
insurance. X ownership over the boat


❖ Object of risk: In the case of indemnity insurance, the object
of the risk is a physical/ non-human object, while in the case
of capital insurance, the object relates to a person. X’s boat

QUESTION 12:
An affirmative warranty and a promissory warranty;
❖ Affirmative warranty; Is a warranty that particular facts are true
at the date when the warranty is given


❖ Promissory warranty; Warranty with regard to the future: that a
particular fact or state of affairs will be true/ continue to be
true

QUESTION 13:
An insurance agent and an insurance broker;
❖ An insurance agent: insurers aren’t natural people and are
legal entities who can only act through people representing
them: prospective insured gets a broker to negotiate the most
favorable terms


❖ An insurance broker; the insured may employ a representative
to act on his behalf in obtaining, negotiating and maintaining
insurance cover.