LML 4805 EXAM PACK-LATEST.

INSURANCE LAW QUESTIONS: DEFINITIONS 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; v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 Insurance Law Questions CLS cc Critical Law Studies CC © 2 v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; vPositive misrepresentation: insured makes a positive incorrect statement about a material fact v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 v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 v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 vThe IR proves that IT seee the fact as material = subjective test v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. vAn insurance contract: An insurance contract is a tangible agreement vAn insurance policy: The policy is the reduction of that agreement into a tangible form. QUESTION 9: A cover note and an insurance policy; vAn insurance policy: The policy is the reduction of that agreement into a tangible form. vA cover note: document issued by the insurance company giving temporary insurance until a formal policy is issued Insurance Law Questions CLS cc Critical Law Studies CC © 3 QUESTION 10: Indemnity insurance and capital (non-indemnity) insurance; v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. v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; v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 v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; vAffirmative warranty; Is a warranty that particular facts are true at the date when the warranty is given v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; v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 vAn insurance broker; the insured may employ a representative to act on his behalf in obtaining, negotiating and maintaining insurance cover