Insurance Flashcards
(34 cards)
Is there any form of consumer insurance law in South Africa?
The Policyholder Protection Rules protect consumer insured parties only, including natural persons and smaller juristic persons (using the same thresholds for juristic persons as the Consumer Protection Act.
What are the key differences between capital and indemnity insurance and how does this play out in South African insurance statute law?
Capital Insurance = life insurance 2017 Act, defined sum which is to be received by the insured if event occurs
Indemnity - non -life insurance, if an uncertain event occurs, the insured receives an amount of money equal to the loss suffered. i.e insuring property
Can you list and explain the essential elements of an insurance contract?
(1) Obligation on insured to pay a premium= price paid by the insured for insurance cover
(2) The happening of a specified uncertain or unplanned event= uncertainty element
(3) Obligation of the insurer to render compensation= insurer must compensate the insured if the uncertain event occurs
(4) The existence of an insurable interest= you must have interest in the item insured beyond merely the chance of receiving a windfall payment.
why do we need elements of an insurance contract?
Insurance is a form of specific contract which attracts particular niche rules (in the same way that ‘sale’, ‘lease’, and ‘mandate’ do). We thus need a working definition for an ‘insurance contract’ in order to distinguish it from other forms of contract.
What is the relevance of insurable interest?
Insurance must be separated from gambling - The distinguishing mechanism adopted by most jurisdictions is insurable interest. That is to say that you must have interest in the item insured beyond merely the chance of receiving a windfall payment.
What is the insurable interest test?
‘Factual expectation of damage’ test= loss has been suffered (Littlejohn).
when must an insurable interest exist for a valid claim in indemnity insurance
the insurable interest must exist at the time of the claim.
when must an insurable interest exist for a valid claim in capital insurance
the insurable interest must exist at the time of entering into the insurance contract.
can you have an interest in the property of a spouse if you are married out of community of property
“if the insurer can show that he stands to lose something of an appreciable commercial value by the destruction of the thing insured, then even though he has neither a jus in re nor a jus ad rem to the thing insured, his interest will be an insurable one” (LittleJohn)
Can a shareholder insure property belonging to his company
Macaura -Neither a simple creditor nor a shareholder in a company has any insurable interest in a particular asset which the company holds.’
But in SA - Lorcom 13 - 100% shareholder can have an interest in the property
What are the requirements for a contract to be voidable for misrepresentation in the general common law of contract?
The misrepresentation must be material and induce the person to contract.
What does the common law duty of disclosure in insurance law entail?
hether the ‘reasonable, prudent person’ would think that information not disclosed was ‘material to the assessment of risk’. This was a lesser standard than the ‘reasonable insurer’ (Oudtshoorn)
Do we treat positive misrepresentation and nondisclosure separately in SA?
In SA we treat it the same
which statute/instrument do the tests for positive misrep and non disclosure appear in?
s53 of the STIA and Rule 21 under the LTIA and possibly 2A.9.3 of the short term Policy Protector rules
how is an affirmative warranty created in an insurance context?
The representation is converted into an affirmative warranty when the insured signs a so-called ‘basis of the contract’ clause in the proposal form
how is a promissory warranty created in an insurance policy
A promissory warranty - stipulated by the insurer and instructs the insured to do something while cover is in place. A promissory warranty will appear in the actual insurance policy and is a term of the contract itself
what does SA common law say about insurance warranties?
‘A warranty … is a condition which must be exactly complied with, whether it is material to the risk or not. If it be not so complied with … the insurer is discharged from liability.’ Lewis = a warranty must be complied with as any other condition – whether material to the risk or not. A strict compliance with its terms is a condition precedent to liability.
Does the statutory materiality test apply to insurance warranties?
Norman Welthagen Investments : due to the use of the operative word ‘representation’ in the provision, only pre-contractual warranties were covered (that is: affirmative warranties) and not warranties contained in the insurance policy (that is: promissory warranties). The common law position as per Lewis was thus held to continue to be applicable with promissory warranties.
It has not been overruled yet.
What is the approach of South African law to the interpretation of insurance contracts?
Oosthuizen:…[I]nsurance contracts are contracts like any other and must be construed by having regard to their language, context and purpose in what is a unitary exercise. A commercially sensible meaning is to be adopted instead of one that is insensible or at odds with the purpose of the contract. The analysis is objective and is aimed at establishing what the parties must be taken to have intended, having regard to the words they used in the light of the document as a whole and of the factual matrix within which they concluded the contract.
What do the terms ‘risk’ and ‘peril’ mean and how are they used in insurance law and insurance policies?
Risk: the possibility of loss occurring
Peril: a potential cause of loss
Distinguish a limitation from an exception in the context of an insurance policy.
when claiming under a policy, the insured must establish that her claim falls within the ‘four corners of the promise’ made to her by the insurer (in other words: within the general parameters of covered risk). These general parameters constitute the ‘limitations’ of the policy.
within the frame of these general parameters, there may still be specific carve outs, or ‘exceptions’/’exclusions’, which remove specific risk items which would otherwise fall within the general parameters.
What are the South African rules on onus of proof in this context of limitations and exceptions?
the onus first falls on the insured to demonstrate that her claim falls within the four corners of the promise made to her - That is that her claim falls within the limitations of the policy.
if this test is met, but the insurer argues that the claim is nevertheless excluded on the wording of the policy, the onus shifts to the insurer to demonstrate that exclusion.
May the default rules be reversed by a particular contractual provision when it comes to exclusions?
Joosub = the court found that the reverse onus provision required that the insurer at least establish an evidentiary basis that the exclusion was relevant. This interpretation saved the provision from being against public policy
Describe the South African approach to determining causation in the insurance context.
Causation: the loss must be caused by an insured peril both in the sense that ‘but-for’ the occurrence of that insured peril the loss would not have occurred, AND in the sense that the insured peril was the ‘proximate cause’ of the loss.
