Unit 5-Insurance Flashcards
Define insurance
Insurance is a contract in terms of which the insurer undertakes, in return for the payment of a price or a premium by the insured, to render the insured a sum of money, or the equivalent to a sum of money, on the happening of a specified/uncertain event in which the insured has some interest.
Describe difference between indemnity insurance and non-indemnity insurance
indemnity insurance is taken out to indemnify oneself against a loss. Meaning that you are reimbursed when you suffer a loss. insurance is more patrimonial (property/business/liability)
A non-indemnity insurance is taken out to indemnify oneself against the occurrence of a future uncertain event such as death or disability. This is non-patrimonial (loss of a limb/loss of life)
What is the impact of the Constitution on Insurance law?
The Constitution does not make provision for insurances, however, section 9 (discrimination) plays an important role. In the context of insurance, where refusal to insure a specific risk or the unequal treatment of policyholders pertaining to their cover cannot always be justified legally or for technical insurance reasons.
Discuss the significance of Schedule to the Equality Act in relation to discrimination in the context of insurance services and membership thereof.
The following factors must be followed:
a) unfairly refusing on one or more of the prohibited grounds to provide or to make available an insurance policy to any person;
b) unfair discrimination in the provision of benefits, facilities and services related to insurance;
c) unfairly disadvantaging a person or persons, including unfairly and unreasonably refusing to grant services to persons, solely on their HIV/AIDS status.
Which legislation governs insurances?
The Insurance Act. it has formally abolished the misnomers of “short-term” and “long-term” insurance, thereby formally bringing South African terminology in line with international standards. This Act also replaces all prudential aspects of the existing insurance statues (LITA) & (SITA), these are not replaced in their entirety therefore, where the Insurance Act is silence, LITA & SITA shall be applicable, respectively.
How does formal insurance work?
There is distribution of the risk between bearers of the same type of risk .
There are contributions made to the communal pool made by each member for the transfer of risk to the group are relatively small.
The insurers then manage the pool and carry our the duties of the group and bear the risk on behalf of individuals. In exchange, the insurer pays premium.
In a case of damage, the financial burden is spread over the group.
What are the sources of insurance law?
Common law, Long-term insurance act (LITA) and short-term insurance act (SITA), Insurance Act, The constitution, General Code of conduct, RAF/UIF
Types of insurances:
First party insurance: compensation under own insurance instead of from someone else’s policy
2. Third party- liability insurance purchased for protection against claims of other
3. Mandatory third party insurance- RAF/COIDA/UIF
4. Property Insurance-
