LML4805 PORTFOLIO MEMO - OCT./NOV. 2023 - SEMESTER 2 - UNISA - DUE 24 OCTOBER 2023 - DETAILED ANSWERS WITH FOOTNOTES & BIBLIOGRAPHY- DISTINCTION GUARANTEED!

LML4805 PORTFOLIO MEMO - OCT./NOV. 2023 - SEMESTER 2 - UNISA - DUE 24 OCTOBER 2023 - DETAILED ANSWERS WITH FOOTNOTES & BIBLIOGRAPHY- DISTINCTION GUARANTEED! Question 1 (a) An insured is under a duty to disclose material facts to the insurer prior to the conclusion of an insurance contract. However, this duty is not unlimited and there are several instances where, even if the facts in question are material, the insured need not disclose it. Discuss five such instances where an insured does not have a duty to disclose material facts. (5) (b) Good faith and insurable interest may be regarded as possible essential requirements of an insurance contract. Provide reasons why some commentators are of the view that good faith and insurable interest should not be regarded as essential requirements. Refer to relevant authority. (6) (c) Distinguish between (i) property insurance and liability insurance; and (2) (ii) mutual insurance and premium insurance. (2) Your answer must also contain examples of property and liability insurance cover. (2) (6) (d) Distinguish between the following: (i) a representation and a warranty; (2) (ii) an affirmative warranty and a promissory (continuing) warranty; and (2) (iii) between a warranty of fact and a warranty of knowledge/ opinion (2) And give an example of a warranty of opinion. (2) (8) [25] Question 2 (a) Roger owns a house from which he runs a restaurant and guesthouse. He insures this property against “all risks”. Explain whether or not the insurer will be liable on the insurance contract in the instances below. You must also in each instance provide a reason for your answer. You may further assume that the insurance contract itself does not contain any express term which has a bearing on the issue: (i) while preparing breakfast for guests, Roger negligently causes a fire which damages his kitchen and half of the guest rooms; (2) (ii) to obtain the insurance money, Roger intentionally causes a fire which destroys the premises completely; (2) (iii) on receipt of an exorbitant bill for a weekend stay at the guesthouse, one of the guests, Petronella starts a fire which destroys the premises. (2) (iv) the premises is damaged when it collapses as a result of the bad quality of the cement used in its initial construction; and (2) (v) lightning causes a fire which damages the premises and the insurer’s subsequent investigations reveal that Roger was unlawfully distilling brandy in the restaurant. (2) (10) Lettie insures her own life for R5 million and appoints her secretary, Lerato, as the sole beneficiary in terms of the life policy. On Lettie’s death, her daughter, Susan is rather upset when she hears of Lerato’s appointment as her mother’s beneficiary as Lettie’s estate is worth only R 2 000 with exclusion of the policy. Explain the legal position of the nomination to the parties and address the potential validity nomination; legal form thereof takes and if Susan has any remedy to challenge the nomination. (5) Donald is the owner of a motor vehicle that is insured with the Easy-Claims Insurance Co. The vehicle is seriously damaged in an accident with a vehicle driven by John. It is established that the accident was caused by the equal contributory negligence of Donald and John, and that Donald’s loss amounts to R20 000. Donald wants a very brief legal explanation from you on the following situations: (i) The insurer pays Donald R19 000 (there is provision for an excess of R1 000 in the insurance contract) and when Donald then claims R10 000 (being 50 per cent of his loss, given the equal contributory negligence) from John, the latter (John) argues that he is liable for only R1 000, being the uncompensated part of Donald’s loss. (2) (ii) Donald receives R10 000 by way of compensation from John. When he (Donald) then claims from the insurer, the insurer argues that it is liable only for R 9 000, being the uncompensated part of Donald’s loss. (3) (5) Describe any two informal risk-spreading mechanisms in the ‘popular economy’ and critically analyse their relevance in the current South African insurance industry. (5) [25] Question 3 (a) Explain the usual application of the contra proferentem rule as well as the exceptions thereto. (5) b) Explain the relevance of decision Napier v Collet & Another 1995 (3) SA 140 (A) for the development of the South African insurance law. Also provide a brief summary of the facts of the case. (5) c) Write a short note on the decision in Rand Mutual Assurance Co Ltd v Road Accident Fund 2008 (6) SA 511 (SCA) by briefly stating the decision of the Court; and critically evaluating the correctness and influence, if any, of the decision on the South African insurance law. (5) d) Explain the validity of the following statement ‘A clause relating to the time and manner of payment of premiums is commonly inserted in an insurance contract to improve the insurer’s legal position at common law.’ Also discuss the common-law position relating to the payment of the premium and explain the function and the effect of the clause relating to the payment of premium in an insurance contract. (5) (e) Provide examples by which you illustrate the differences between (i) under-insurance and over-insurance, (ii) and then also explain the effect of both under-insurance and over- insurance on an insured’s claim. TOTAL [75] (5) [25]