LEGAL ADVICE TO CAROLINE

INTRODUCTION

The objective of insurance is to protect people from financial disasters. They by this protection
by the payment of a moderate price in exchange for promise to pay an agreed amount if or when
the disaster occurs.[ CITATION RHC98 \l 1033 ]

The seller of the protection is the insurer, the buyer is the insured. The price is known as the
premium and the disaster as risk. To complete this short list of technicalterms, the contract is
almost always reduced to writing known as a policy. There are two types of insurance contract
which are Indemnity and non-Indemnity and are seven essentials/principles that create an
insurance contract for the insurer and insured which are Insurable interest, utmost good faith,
proximate cause, indemnity, subrogation, contribution and loss minimization so meeting and
understanding these seven principles give Caroline the right to advocate for their rights.
[ CITATION Jus18 \l 1033 ]

The fact here is Caroline insures her car against damage for $100 000 .The car is involved in an
accident and damaged beyond repair. The insurance company tenders to pay Caroline $75 000,
as this is the current “book value “of the car. Caroline insists on being paid $ 100 000.

Like any other contract, for insurance contract to be binding there must be an agreement between
the insurer and the insured, thus consensus ad idem.

The principle of Insurable interest state that the subject matter of the contract must be provide
some financial gain by existing for the insured (policy holder Caroline) and would lead to a
financial loss if damaged or destroyed. In this case Caroline has an insurable interest which is her
car that involved in an accident and damaged beyond repair, hence has a right to claim.

Case: Macaura v Northern assurance company

Both parties involved in an insurance contract should act in good faith towards each other. The
insurer must provide clear and concise information regarding the terms and conditions of the
contract. In this case it seems the terms of the contract did not clearly state the amount that
Caroline has to get and the insurance company is bringing out the issue of Book value now that
Caroline is making a claim. This was supposed to be clearly stated in the contract before signing
the agreement. The insured has also a duty to disclose information regarding the subject ofthe
matter and life history.

Case: M&F v Oudtshoom, The facts

Indemnity is a guarantee to restore the insured to the position he /she was in before the uncertain
incident that caused a loss for the insured. The insurer compensate the insured. The company
promises to compensate the policy holder for the amount of loss up to the amount agreed upon in
the contract.

Essentially indemnity is the basis and part of the contract that matters the most for Caroline
because this is the part of the contract that says she has to be compensated or in other words
indemnified for her loss.

On indemnity the insurer promises to compensate the insured to the extent of the loss occasioned
by the risk insured against. The loss is actually measured and the insured is given the equivalent
of the loss the insurer can either pay in cash/money or replace the lost item. The amount of
compensation is in direct proportion with the incurred loss. The insurance company will pay up
to the amount of the incurred loss or the insured amount agreed on in the contract, whichever is
less .for instance , if your car is insured for $100 000 but damages are only $3000.You get $
3000 not the full amount.

Non indemnity the insurer promises to compensate a fixed sum of money and best applied in life
insurance cover and disability, where it is impossible to compensate the death of one or one’s
body parts.

The principle of Subrogation is substituting one creditor i.e the insurance company for another
that is the insurance company representing the person responsible for the loss. After the insured
has been compensated for the incurred loss on a piece of property that was insured, the rights of
ownership of this property. The insurer can only benefit from subrogation by winning back the
money it paid to its policy holder and the costs of acquiring is money. Anything paid extra from
the third part, is given to the policy holder.as in the case of Basil Kunaka v Safel

Case:Basil Kunaka v Safel. The plaintiff made a claim of $15000 which the insurance company
repudiated. The plaintiff mitigated his loss by selling the wreckage and realized a sum of $ 3500.

Court: the court ordered the defendant to pay the sum of 11500 to the plaintiff being the
compensation for plaintiff’s damaged motor vehicle.

Advice to Caroline:according to [ CITATION RHC98 \l 1033 ] ,if the insurer does not make a
payment to satisfy your claim whether legally obliged or not provided honestly, it is not entitled
to bring any claim against any third party. This implies that the insurance company must not
make any claim to any third part.

The principle of Contribution establishes corollary among all the insurance contracts involved
in an incident or with the same subject, it allows for the insured to claim indemnity to the extent
of actual loss from all the insurance contracts involved in his or her claim. Each policy you have
on the same subject matter pays their proportion of the loss incurred by the policy holder and is
an extension of principle of indemnity that allows proportional responsibility for all insurance
coverage on the same subject matter.

Case:

The principle of loss minimization, in an uncertain event, it is the insured responsibility to take
all precautions to minimize the loss on the insured property. Insurance contracts shouldn’t be
aboutgetting free stuffevery time something bad happens. Therefore a little responsibility is
bestowed upon the insured to take all measures possible to minimize loss on the property.

Case: Princev Road accident fund, prince was involved in a road traffic accident and made a
claim for past and future earnings.

Court: Plaintiffs claim for past and future loss succeeds

Advice to Caroline, insurance is not all about getting compensated or paid in future you must
exercise caution she mightlose life and fail to make any claim