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INSURANCE LAW

Insurance law defines the legal contract between insurers and the insured, where the insurer agrees to provide financial compensation for specified future events, contingent on premium payments. Key legislation includes the Long Term and Short Term Insurance Acts. Essential elements encompass the insurer's obligation to pay, the premium by the insured, the uncertain event's occurrence, and insurable interest. Types of insurance include indemnity and non-indemnity insurance, with principles of good faith, warranties, and the processes of subrogation being critical to understanding obligations and benefits.

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INSURANCE LAW

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  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

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