LML4805 PORTFOLIO EXAM - SEMESTER 2
By
XYZ
123
Submitted in partial fulfilment of the requirements for the LLB degree
BACHELOR OF LAWS
In the
SCHOOL OF LAW
UNIVERSITY OF SOUTH AFRICA
LML4805
Insurance Law
17 November 2020
1
,DECLARATION OF AUTHENTICITY
I, (Full name/s and surname)
Student number: S
declare that I am the author of this examination in LML4805. I further declare that the entire
examination is my own, original work and that where I used other information and resources, I
did so in a responsible manner. I did not plagiarise in any way and I have referenced and
acknowledged any legal resources that I have consulted and used to complete this examination.
By signing this declaration, I acknowledge that I am aware of what plagiarism is, and the
consequences thereof. Furthermore, I acknowledge that I am aware of UNISA’s policy on
plagiarism and understand that if there is evidence of plagiarism within this document, UNISA
may take the necessary action.
Date: 17/11/2020 .
Place: .
Signature:
(provide an electronic signature or type or write your name or surname again)
2
, QUESTION 1
1(a)(i)
An average clause is made use of by insurers to discourage
under-insurance. Insurers make provision in non-marine
insurance contracts with use of the average principle in the
event of under-insurance.
Where there is an instance of under-insurance, an average
clause is effective in so far that the insured does not recover
full indemnity as the insurer’s liability is limited to a rateable
proportion of the insured’s loss.
Under-insurance works to the disadvantage of insurers and
negatively impacts on their premium income.
The burden of proving under-insurance rests on the insurer
and the insurer may apply an average to the insured’s
claim.1
When the insured is to be taken to be under-insured, the
average clause may provide.2
1(a)(ii)
Contracts in South African law are contracts of good faith
(contracts bonae fidei). However, an insurance contract in
English Law is a contract of the utmost good faith (a
contract uberrimae fidei). Contracts of this type have been
said to impose a duty on both of the contracting parties to
be more frank and forthcoming, to be even better than good,
in the course of their negotiations preceding the contract
than in ordinary commercial transactions.3 Furthermore
they must refrain from misrepresentation and in some
circumstances, it might be required for them to volunteer
information that may even be seen as confidential.
In Mutual & Federal Insurance CO Ltd v Oudtshoorn
Municipality,4 it was held that South African law does not
have different degrees of good faith, such as good, better
or best faith, it only has good or bad faith.
1 Kaffrarian Colonial Bank v Grahamstown Fire Insurance Co (1885) 5 EDC 61
2 Mutual and Federal Insurance Co v Chemalum (Pty) Ltd 2007 (2) SA 479 (SCA)
3 Reinecke MFB, Van Niekerk JP & Nienaber PM South African Insurance Law (2013) LexisNexis
Butterworths, Durban. Pg 139-140
4 (1985) (1) SA 419 (A).
3
By
XYZ
123
Submitted in partial fulfilment of the requirements for the LLB degree
BACHELOR OF LAWS
In the
SCHOOL OF LAW
UNIVERSITY OF SOUTH AFRICA
LML4805
Insurance Law
17 November 2020
1
,DECLARATION OF AUTHENTICITY
I, (Full name/s and surname)
Student number: S
declare that I am the author of this examination in LML4805. I further declare that the entire
examination is my own, original work and that where I used other information and resources, I
did so in a responsible manner. I did not plagiarise in any way and I have referenced and
acknowledged any legal resources that I have consulted and used to complete this examination.
By signing this declaration, I acknowledge that I am aware of what plagiarism is, and the
consequences thereof. Furthermore, I acknowledge that I am aware of UNISA’s policy on
plagiarism and understand that if there is evidence of plagiarism within this document, UNISA
may take the necessary action.
Date: 17/11/2020 .
Place: .
Signature:
(provide an electronic signature or type or write your name or surname again)
2
, QUESTION 1
1(a)(i)
An average clause is made use of by insurers to discourage
under-insurance. Insurers make provision in non-marine
insurance contracts with use of the average principle in the
event of under-insurance.
Where there is an instance of under-insurance, an average
clause is effective in so far that the insured does not recover
full indemnity as the insurer’s liability is limited to a rateable
proportion of the insured’s loss.
Under-insurance works to the disadvantage of insurers and
negatively impacts on their premium income.
The burden of proving under-insurance rests on the insurer
and the insurer may apply an average to the insured’s
claim.1
When the insured is to be taken to be under-insured, the
average clause may provide.2
1(a)(ii)
Contracts in South African law are contracts of good faith
(contracts bonae fidei). However, an insurance contract in
English Law is a contract of the utmost good faith (a
contract uberrimae fidei). Contracts of this type have been
said to impose a duty on both of the contracting parties to
be more frank and forthcoming, to be even better than good,
in the course of their negotiations preceding the contract
than in ordinary commercial transactions.3 Furthermore
they must refrain from misrepresentation and in some
circumstances, it might be required for them to volunteer
information that may even be seen as confidential.
In Mutual & Federal Insurance CO Ltd v Oudtshoorn
Municipality,4 it was held that South African law does not
have different degrees of good faith, such as good, better
or best faith, it only has good or bad faith.
1 Kaffrarian Colonial Bank v Grahamstown Fire Insurance Co (1885) 5 EDC 61
2 Mutual and Federal Insurance Co v Chemalum (Pty) Ltd 2007 (2) SA 479 (SCA)
3 Reinecke MFB, Van Niekerk JP & Nienaber PM South African Insurance Law (2013) LexisNexis
Butterworths, Durban. Pg 139-140
4 (1985) (1) SA 419 (A).
3
