INSURANCE LAW

1. INSURANCE LAW

2. Definition • A contract between an insurer and the insured in terms of which the insurer undertakes, in exchange for the payment of a sum of money (the premium), to give to the insured a sum of money (or its equivalent) on the occurrence of a specified but uncertain future event in which the insured has some interest

3. Insurance legislation • Long Term Insurance Act • Short Term Insurance Act

4. The 4 essential elements • The insurers obligation to pay a sum of money or its equivalent • The insured's obligation to pay the premium • The occurrence of an uncertain future event • An insurable interest

5. Types of insurance • Indemnity insurance • Non-indemnity insurance

6. Indemnity insurance • There is uncertainty as to whether the insured event will ever occur • Eg: a hijacking, a car accident, a fire • The amount of the loss (if any) is unknown at the time of taking out the policy • The insured must have an insurable interest in what is being insured

7. Non-indemnity insurance • It is certain that the event will occur – the only uncertainty is when • Eg: a persons death • The amount the insurer must pay is decided at the time the insurance is taken out & is not related to the loss • The insured must have an insurable interest in the life of the person being insured

8. Good faith • The concept of ubermae fides

9. Warranties • Affirmative warranties • Promissory warranties

10. Affirmative warranties • A declaration • Eg: Age last birthday • Materiality

11. Promissory warranties • A promise or undertaking • Eg: The insured must arm the alarm system whenever leaving the property unattended • Does not have to be material

12. Under & over insurance • Over insured – no benefit to insured • Under insured – insurer will apply average

13. Subrogation • Places insurer in shoes of insured • Allows insurer to sue in insured’s name • Cannot benefit twice from your mishap