Insurance and Employment Laws (Coursework Sample)

Introduction to Insurance Law
Insurance was defined in Lucena V Crawford as ‘ … a contract by which the one party in consideration of a price paid to him adequate to the risk becomes security to the other that he shall not suffer loss, damage or prejudice by the happening of the perils specified to certain things which may be exposed to them.’
For the contract of insurance to be enforceable, there must be:
1 Some element of uncertainty about the event causing the risk in question, then the contract is not one of insurance.
2 The insured must have had an insurable interest in the subject matter of the contract so that its loss or destruction results in direct loss suffered by him as opposed to loss by another person. Where there is no insurable interest, one cannot claim because the very basis of insurance is that one would suffer some loss or prejudice if the loss occurred. Insurable interest means a property right in something, and not merely some anxiety about a loss.
Types of insurance
* Indemnity insurance, under which an indemnity is provided against loss, the measure of loss being the quantum of payment which shall not exceed the sum insured.
* Contingent insurance, under which the sum assured is paid on a contingent event. The sum paid is not measured by the loss but is stated in the policy, e.g., in the case of life assurance. The insurer undertakes to pay the money on the happening of an event, which is certain to happen, but the time of its happening in unknown. Where the event fails to happen, e.g., if the person does not die within a specified period, the consideration fails and the premiums are recoverable.
Principles of insurance
* Insurable interest, Re: introductory note above. This is generally an actual and legal interest, financial or otherwise, in the subject matter of a contract which provides the person insured with the right to enforce the contract. A person for instance, has an insurable interest in his property and in his own life and that of his wife but not in the life or property of another: Macaura v Northern Assurance Macaura insured against fire some timber to be sold in his name. Later almost the timber was gutted by fire, and he claimed against the insurer. The court held that he was not the owner of the timber, the company was; and he did not have an insurable interest in the company.
* Good faith, i.e., uberrimae fidei.
The concept of uberrimae fidei means that a contract of insurance is based on utmost good faith. That is the insured is bound to disclose all material facts to an insurer. Material facts are those which have a bearing on the insurer’s decision on whether to offer insurance or not. Failure to disclose may render the contract voidable at