Insurance defined:
Insurance is a contact between an insurer and an insured individual. The insurer undertakes to pay the insured a sum of money in the event of an accident, theft or damage caused by fire or natural disasters in return for the payment of a premium.
Insurance in the South African context:
The law of insurance in South Africa is concerned with:
- The conclusion and consequences of insurance contracts
- General aspects of the law of damages
- The rules of insurance intermediaries
- Insurance tax law
- Supervision law
The legislative framework that governs insurance policies in South Africa:
- Long Term Insurance Act
- Short Term Insurance Act
- Insurance Laws Amendment Act
- Financial Services Board Act
- Financial Advisory and Intermediary Services Act
For a contract to exist in South Africa there must be an offer as well as acceptance. The policy document normally contains the contract.
The parties to the insurance policy must agree on:
The person or property to be insured
The policy should specify clearly who is insured or the property that is insured
The event insured against
The policy should specify clearly what the insurance policy covers against. This may include theft, damage caused by fire, flooding, third party damage or even malicious damage.
The period of insurance
The policy should specify for how long the insurance cover is effective.
The amount of the premium
Insurance policies should be clear about how much the policyholder is expected to pay in premiums. This section should also be clear about excess amounts as well as the method that can be used to pay premiums (annually or monthly).
The amount payable by the insurer on the occurrence of the event insured against
The policy should make it clear how much the insurance provider will pay out in the event of an accident or when an individual claims.