LML4805 insurance LAW
SUMMARISED NOTES
2022/2023
, General principles of insurance law
Ch 1 introduction history and sources of insurance law
5. prelim def of ins contract: Lake v Reinsurance corp: A contract between an insurer (or assurer) and an insured (or
assured) whereby the insurer undertakes in return for the payment of a price or premium to render to the insured a
sum of money or its equivalent on the happening of a specified uncertain event in which the insured has some
interest.
- def bridges gap between indemnity and non-indemnity insurance
- Demarcates insurance from wagers by requiring interest
7. def and nature of ins law: consists of conclusion and consequence of ins contracts (mainly private ins law), law of
damages, rules on insurance intermediaries, insurance tax law, insurance company or supervision law, certain acts
(mainly public ins law)
- rules peculiar to ins law: insurable interest, subrogation, double insurance
- rules that apply to all contracts: offer and acceptance, contracts in favour of third parties
Classification of ins contracts
8. purpose and criteria: may reflect difference in underlying legal principles
- crit: nature of interest; nature of event insured against, how recoverable amount determined, how profits of insurer
dealt with
9. indemnity and capital insurance:
- indemnity= contract provides that the insurer will indemnify the insured for patrimonial loss or damage suffered as
the proximate result of the happening of the event insured against. Restores injured to position quo ante, no profit
made. Uncertain event.
- capital= insurer undertakes to pay a specified amount or periodical amounts to the insured on the happening of the
event insured against. Event relates to person of insured or third party. May be certain event, eg death
- difference lies in nature of interest insured/ object of insurance; patrimonial and non-patrimonial interest
- law determines which interests may be insured
- capital insurers may not claim proportionate contribution by other insurers; or demand subrogation
- doctrine of imputation of benefits do not apply to capital ins (collateral benefits)
10. property and liability ins:
- property (asset) ins= nature of interest insured is positive element (assets) in patrimony; eg ownership in house;
expectation of benefit
- liability=negative elements of patrimony; eg medical expenses , third party
11. classific acc to nature of event insured against: marine, fire, personal accident ins; incl capital and indemnity
12. short-term and long-term ins: acts
- short-term= providing policy benefits under defined short term policies eg engineering policy, liability policy, motor
policy
- long-term policy= providing policy benefits under defined long-term policies, eg disability policy, life policy
- real diff not clear, administrative purpose
13. valued and unvalued policies:
- valued= specifies value for object of insurance; avoids difficulty of proving value of object of ins to determine extent
of insured’s loss; must still prove loss and may claim only that
,- no valuation, insured must prove his loss and extent in usual way
14. mutual and profit ins:
- mutual= no profit, policy owners members, participate in exercise of control of general meeting of insurer, profits
distributed to policy owners. Today mutual companies without share capital
- profit ins= profit distributed amongst insurer’s shareholders
15. Private and social ins:
- priv= individual interests;
- social= general interests of organised society; implemented by state, compulsory; eg COID; UIF. Ordinary rules of ins
do not apply
Sources of SA ins law
24. intro: - May be general law matter- ordinary rules of law- or insurance matter- insurance law
- roman-dutch law 1652- 1879 english ins law- 1977 repealed these acts and r-d law resored
25. roman-dutch ins law:
- principles good supplementary source of ins law
- mutual and federal v oudtshoorn municip- English law repealed; ins traced to lex merc; roman dutch and Italian law
merchant authority; did not rely on English law but took guidance from spirit of RD law and general principles of SA
law
26. English ins law:1879 law passed in cape colony that English law govern insurance, also 1902 OFS
- Pre-Union Statute Law Revision Act 1977- repealed English law
- not retroactive
- English law no binding authority
27. foreign ins law: ins law has intnl character
- lex merc absorbed in many law systems, comparison valuable tool in dev law of ins if many systems included
28. general principles of SA law: apply in matters not peculiar to ins
- exceptions to general law regarded as part of ins law proper
29. Bill Of Rights: influence interpret and dev of law
30. Conclusion: principles of English law retained as long as their application leads to harmonious and satisfactory
results; but RD and general principles applied if better results
Ch 2: Basis of insurance
Introduction
31. nature of issues:
- basis of ins= purpose of contract of ins as expressed in terms of contract
32. terminology: capital= non-indemnity = contingency
, 33. concept of loss or damage in law of damages:
- patrimonial loss= person’s estate or patrimony diminished due to uncertain or unplanned event; damages claimed
- non-patrimonial loss= diminution as result of uncertain event in quality or extent of highly personal interests of an
individual in satisfying his legally recognised needs but which do not affect his patrimony, claim damages, consolation
satisfaction
Basis of indemnity insurance
34. traditional indemnity theory: reparation for patrimonial loss as defined by law, no more than patrimonial
indemnity covered as seen by rules of over-insurance and double insurance
- can trad theory cover value policies, ins for new value and ins in favour of third parties?
35. principle of indemnity and valued policies: parties agree on value of insured’s interest in object of insurance
- if total loss claim full value agreed upon
- if loss partial, ratio of actual value of prop after loss to actual value before loss
- valuation may be capable of being overruled in cases of overvaluation if insurer can prove unacceptable deviation
from real value of object involved and prove real extent of loss. Roman-dutch rule. Public policy. Otherwise hold to
contract.
- indemnity and value policies compatible
36.principle of indemnity and new value insurance: in terms of ins contract, insurer agrees with insured to accept
value or price of a new thing of similar description to the object of the risk as the basis for compensating the insured.
- cost of replacement expressly provided in contract accepted in English law
- reconcilable with indemnity principle
Basis of capital ins
39. interests that may be insured:
- unlimited interest a person has in his own life, health of mind, body and limbs, and the moral or emotional interest
a person has in the life health and body of spouse.
- fiancée, negative interest (not living beyond certain age), unborn child, person against whom one has right of
support
- English law- third person only up to extent of pecuniary interest
42. purpose and basis of capital ins:
- purpose: to provide insured with capital to aid in overcoming the prejudice or harm resulting from the happening of
the insured event, and as satisfaction or consolation for the loss or impairment of a personal interest caused by the
occurrence of the peril
- nature and extent of harm resulting from event depends on nature of interests open to insurance under contract of
capital ins
- no proper market value placed on abstract and fundamental personal interests
- may therefore insure for any amount unless legislature places ceiling
- also express or tacit contractual satisfaction/ consolation for loss
48. distinction between insurance and wagers by means of adapted indemnity theory
- adapted indemnity theory= allows for indemnity and capital ins
- contracts of ins have as purpose indemnification /consolation/ satisfaction of insured, whilst wager not based on
indemnity
