LML4805
ASSIGNMENT 1 SEMESTER 2 2025
UNIQUE NO.
DUE DATE: 12 AUGUST 2025
, LML4805 – Assessment (Second Semester)
Question
"Insurance contracts may be classified according to various criteria and these
classifications are not always mutually exclusive."
Explain this statement with reference to the classification between first-party and third-
party insurance, and the classification between property and liability insurance. Also
provide relevant examples to support your explanation.
Title: Classification of Insurance Contracts
1. Introduction
Insurance contracts can be classified in various ways depending on the nature of the
insured interest, the relationship between the insured and insurer, and the risk covered.
These classifications are not mutually exclusive, meaning that a single insurance
contract can fall into more than one category simultaneously. Two important bases of
classification are:
(a) First-party vs third-party insurance; and
(b) Property vs liability insurance.
2. First-party and Third-party Insurance
First-party insurance refers to contracts where the insurer undertakes to indemnify the
insured directly for loss or damage suffered by the insured. Here, the insured is the
claimant under the policy. Common examples include fire insurance, theft insurance,
and personal accident insurance. For instance, if a homeowner takes out a fire
ASSIGNMENT 1 SEMESTER 2 2025
UNIQUE NO.
DUE DATE: 12 AUGUST 2025
, LML4805 – Assessment (Second Semester)
Question
"Insurance contracts may be classified according to various criteria and these
classifications are not always mutually exclusive."
Explain this statement with reference to the classification between first-party and third-
party insurance, and the classification between property and liability insurance. Also
provide relevant examples to support your explanation.
Title: Classification of Insurance Contracts
1. Introduction
Insurance contracts can be classified in various ways depending on the nature of the
insured interest, the relationship between the insured and insurer, and the risk covered.
These classifications are not mutually exclusive, meaning that a single insurance
contract can fall into more than one category simultaneously. Two important bases of
classification are:
(a) First-party vs third-party insurance; and
(b) Property vs liability insurance.
2. First-party and Third-party Insurance
First-party insurance refers to contracts where the insurer undertakes to indemnify the
insured directly for loss or damage suffered by the insured. Here, the insured is the
claimant under the policy. Common examples include fire insurance, theft insurance,
and personal accident insurance. For instance, if a homeowner takes out a fire
