Exam (elaborations)
LML4805 EXAM PACK with Complete Solutions 2023
LML4805 EXAM PACK with Complete Solutions 2023
[Show more]
Content preview
LML 4805 EXAM PACK with Complete Solutions 2023DEFINITIONS
Distinguish (in a single sentence, where possible, and with theaid of
examples, where necessary) between:
QUESTION 1:
The insured and the person concluding the insurance contractwith
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 insureB’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 termsof
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 termsof
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 Graceas
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 aimedat
providing the insured with indemnity against his loss caused
to the owners of ships
, ❖ 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 insurancecontract
❖ 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 asa
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
,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 inthe 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 aretrue
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/ continueto 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, negotiatingand maintaining
insurance cover.
, 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 aresult of which
the other party is induced to enter into the contract/ to agree
to specific terms in the contract, whereashe 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 damagefrom
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 coversany 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 the3rd
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 ifthe insured suffers
no loss, the 3rd party has no claim against the insurer.
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through EFT, credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying this summary from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller mynorcharles. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy this summary for R140,51. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
79223 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy summaries for 14 years now