LML4805
ASSIGNMENT 1 SEMESTER 2 2025
UNIQUE NO.
DUE DATE: 12 AUGUST 2025
, Insurance Law
1. Introduction
In South African insurance law, classification of contracts is not merely an academic
exercise, but a tool for determining the nature of the insurer’s obligation, the rights of the
insured, and the applicable regulatory framework. Different criteria can be used to
classify insurance policies including the relationship between the insured and the
beneficiary, and the type of risk insured against. These classifications are not mutually
exclusive; a single policy may be placed in more than one category simultaneously. This
answer focuses on the distinction between first-party and third-party insurance, and
between property and liability insurance, with reference to statutory definitions and
academic commentary.
2. First-party vs Third-party insurance
First-party insurance refers to contracts in which the insurer undertakes to indemnify
the insured for a loss suffered directly by the insured. The benefit is paid to the insured
(or a nominated beneficiary) rather than to a third party. Havenga defines this as
“insurance where the insured is both the contracting party and the beneficiary of the
cover provided.”¹ Examples include:
Life insurance: where the insurer pays a specified sum on the death of the
insured.
Household contents insurance: which covers the insured’s own movable
property against perils such as theft or fire.
Personal accident insurance: where the insured is compensated for injuries
suffered in an accident.
By contrast, third-party insurance involves an obligation on the insurer to indemnify
the insured against liability claims brought by third parties.² The payout is made in
consequence of the insured’s legal liability to another. Common examples include:
ASSIGNMENT 1 SEMESTER 2 2025
UNIQUE NO.
DUE DATE: 12 AUGUST 2025
, Insurance Law
1. Introduction
In South African insurance law, classification of contracts is not merely an academic
exercise, but a tool for determining the nature of the insurer’s obligation, the rights of the
insured, and the applicable regulatory framework. Different criteria can be used to
classify insurance policies including the relationship between the insured and the
beneficiary, and the type of risk insured against. These classifications are not mutually
exclusive; a single policy may be placed in more than one category simultaneously. This
answer focuses on the distinction between first-party and third-party insurance, and
between property and liability insurance, with reference to statutory definitions and
academic commentary.
2. First-party vs Third-party insurance
First-party insurance refers to contracts in which the insurer undertakes to indemnify
the insured for a loss suffered directly by the insured. The benefit is paid to the insured
(or a nominated beneficiary) rather than to a third party. Havenga defines this as
“insurance where the insured is both the contracting party and the beneficiary of the
cover provided.”¹ Examples include:
Life insurance: where the insurer pays a specified sum on the death of the
insured.
Household contents insurance: which covers the insured’s own movable
property against perils such as theft or fire.
Personal accident insurance: where the insured is compensated for injuries
suffered in an accident.
By contrast, third-party insurance involves an obligation on the insurer to indemnify
the insured against liability claims brought by third parties.² The payout is made in
consequence of the insured’s legal liability to another. Common examples include:
