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Distinguish (in a single sentence, where possible, and with the
aid of examples, where necessary) between:
QUESTION 1:
The insured and the person concluding the insurance contract
with the insurer
• the person taking out the insurance (ie, the person
concluding the contract with the insurer) A may insure
his or her own interest in his or her own house. A may
insure his or her own interest in B’s house. A may insure
B’s interest in his or her own (A’s) house, or in B’s house,
or in C’s house.
• the insured is the person who enjoys protection in terms
of the policy and he is the 1st holder of the policy.
QUESTION 2:
The insured, the life insured and the beneficiary in terms of a life
insurance contract;
• the insured is the person who enjoys protection in terms
of the policy and he is the 1st holder of the policy.
• The life insured is the person whose life is insured
• The beneficiary is the person who will benefit from the
policy
John insures his wife Mary’s life and names his daughter Grace
as beneficiary
QUESTION 3:
A void and a voidable insurance contract
• void: no contract comes into existance because it excludes
one of the basic requirements
• voidable: a valid contract comes into exitsnance but may be
terminated or enforced at the will of the innocent party
QUESTION 4:
Fire insurance and marine insurance;
Marine insurance; is a contract of indemnity and is aimed
at providing the insured with indemnity against his loss
caused to the owners of ships
,
2
Fire insurance: the insurer will be liability in terms of
indemnity insurance for loss caused by fire damage
Look at the nature of he event insured against
QUESTION 5:
Positive and negative misrepresentation by an insured;
Positive misrepresentation: insured makes a positive
incorrect statement about a material fact
Negative misrepresentation: insured fails to disclose a
material fact to the insurer
QUESTION 6:
A limitation on risk and an exception to risk in an insurance
contract
A limitation on risk: the insured has the onus to prove the
event was caused by the event insured against and not the
excluded clause: must prove death – and exclude suicide as
a cause of death
An exception to risk in an insurance contract: insurer
must prove that the event was caused by the execption =
death was caused by suicide
QUESTION 7:
The objective and the subjective test for the materiality of facts
The IR proves that IT seee the fact as material = subjective
test
Reasonable person would consider the fact to be material =
complete OBJECTIVE TEST (Mutual and Federal Case)
QUESTION 8:
An insurance contract and an insurance policy.
An insurance contract: An insurance contract is a tangible
agreement
An insurance policy: The policy is the reduction of that
agreement into a tangible form.
QUESTION 9:
A cover note and an insurance policy;
An insurance policy: The policy is the reduction of that
agreement into a tangible form.
A cover note: document issued by the insurance company
giving temporary insurance until a formal policy is issued
,
3
QUESTION 10:
Indemnity insurance and capital (non-indemnity) insurance;
Indemnity insurance: the contract between the parties –
insurer will indemnify the insured for patrimonial loss/
damages as a result of the happening of the event insured
against. Purpose of the contract: restore the insured to the
position he occupied before. The insured isn’t allowed to
make a profit out of his loss. Interests insured against are
patrimonial.
Capital insurance: insurer undertakes to pay a specified
amount to the insured on the happening of the event insured
against. The interest is non-patrimonial.
QUESTION 11:
The object of insurance and the object of the risk;
Object of insurance: The object of insurance isn’t a physical
object but an interest the insured wants to protect by the
insurance. X ownership over the boat
Object of risk: In the case of indemnity insurance, the
object of the risk is a physical/ non-human object, while in
the case of capital insurance, the object relates to a person.
X’s boat
QUESTION 12:
An affirmative warranty and a promissory warranty;
Affirmative warranty; Is a warranty that particular facts are
true at the date when the warranty is given
Promissory warranty; Warranty with regard to the future:
that a particular fact or state of affairs will be true/ continue
to be true
QUESTION 13:
An insurance agent and an insurance broker;
An insurance agent: insurers aren’t natural people and are
legal entities who can only act through people representing
them: prospective insured gets a broker to negotiate the
most favorable terms
An insurance broker; the insured may employ a
representative to act on his behalf in obtaining, negotiating
and maintaining insurance cover.
,
4
QUESTION 14:
Misrepresentation and non-disclosure;
Misrepresentation (Positive misrepresentation): This is a
positive act consisting in a pre-contractual statement of fact
made by one party to a contract of insurance.
Non-disclosure (Negative Misrepresentation): This is the
wrongful failure by one of the parties to an insurance
contract, during the course of negotiations preceding the
contract, to disclose certain facts within his knowledge, as a
result of which the other party is induced to enter into the
contract/ to agree to specific terms in the contract, whereas
he wouldn’t have done, had those facts been disclosed.
QUESTION 15:
Insurance against all risks and insurance against all losses;
Insurance against all risks; All cover risk: loss or damage
from whatever cause. The insured doesn’t need to prove a
causal link between the peril and the loss This doesn’t cover:
wear and tear/ loss caused by the insured’s intentional
conduct
Insurance against all losses: Contracts covering all loss
resulting from the insured peril isn’t unknown, but
insurance usually covers only specific loss. IC usually covers
any loss suffered as a result of damage/ destruction of an
object of risk to the extent of the insured interest in the
object.
QUESTION 16:
Subrogation and cession.
Subrogation: prevents the infringement of the indemnity
principle = the insured can recover compensation from the
3rd party or the insurer
Cession: The 3rd party as cessionary then gets the right to
claim from the insurer for a loss the insured himself has
suffered – the 3rd party doesn’t acquire a right against the
insurer to claim for a loss that he himself has suffered = so if
the insured suffers no loss, the 3rd party has no claim
against the insurer.
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