LML4805 ASSIGNMENT 2 2026
DATE: 07 APRIL 2026
Question 1
Velly applies for insurance on his own life. He is unaware of the fact that he is
suffering from a terminal disease. Consequently, he does not disclose this fact to
the insurer. Also, on the proposal form for insurance, the insurer does not ask
him any questions about his health. Would the insurer be able to avoid liability for
a claim on the contract if it appears, after Velly’s death, that the insured had been
suffering from such a disease at the time when he applied for the insurance
cover, and that the disease was the cause of his death.
Under the law of misrepresentation, an insurer cannot avoid liability for a life insurance
claim where the insured was unaware of a pre-existing terminal disease at the time of
application and the insurer did not ask any health-related questions. The insurer would
not be able to avoid liability in these circumstances. This conclusion is supported by the
principles of negative misrepresentation (non-disclosure), the limits of the insured’s duty
of disclosure, and the absence of a positive misrepresentation.
The Duty of Disclosure and Negative Misrepresentation
South African insurance law imposes a pre-contractual duty on the insured to disclose
all material facts to the insurer. A failure to do so constitutes a negative
misrepresentation (a misrepresentation per omissionem), which can render the contract
voidable at the insurer’s instance.¹
1 Mutual & Federal Insurance Co Ltd v Oudtshoorn Municipality 1985 (1) SA 419 (A)
DATE: 07 APRIL 2026
Question 1
Velly applies for insurance on his own life. He is unaware of the fact that he is
suffering from a terminal disease. Consequently, he does not disclose this fact to
the insurer. Also, on the proposal form for insurance, the insurer does not ask
him any questions about his health. Would the insurer be able to avoid liability for
a claim on the contract if it appears, after Velly’s death, that the insured had been
suffering from such a disease at the time when he applied for the insurance
cover, and that the disease was the cause of his death.
Under the law of misrepresentation, an insurer cannot avoid liability for a life insurance
claim where the insured was unaware of a pre-existing terminal disease at the time of
application and the insurer did not ask any health-related questions. The insurer would
not be able to avoid liability in these circumstances. This conclusion is supported by the
principles of negative misrepresentation (non-disclosure), the limits of the insured’s duty
of disclosure, and the absence of a positive misrepresentation.
The Duty of Disclosure and Negative Misrepresentation
South African insurance law imposes a pre-contractual duty on the insured to disclose
all material facts to the insurer. A failure to do so constitutes a negative
misrepresentation (a misrepresentation per omissionem), which can render the contract
voidable at the insurer’s instance.¹
1 Mutual & Federal Insurance Co Ltd v Oudtshoorn Municipality 1985 (1) SA 419 (A)
