It may be agreed in an insurance contract that the insured may recover only a specified 1Y proportion of his or her loss. In motor vehicle and liability insurance, so-called excess
clauses are common. In terms of these clauses the insured must bear a specific proportion of the loss himself or herself, for example the first Rl00 of the loss.
The risk Agreement to insure against a particular risk the The uncertain event insured against is known as the nsk.
Descnption of the risk in the contract is important, because the insurer must know precisely the nature of the risk and the insured, the extent of his or her cover. The parties always agree to insure against the occurrence of a specific (or determinable) event. The insurer’s obligations are always coupled with some event which must cause the result mentioned in the contract, for example a fire which damages the insured’s house.
The description of the risk must include: the
(a) the object insured, for example a motor car, or a person’s life
(b) the hazard insured against, for example theft
(c) circumstances affecting the risk, for example limitation of the insurance to theft of a motor car while it is parked in a specific place
A number of other factors may also affect the risk. The risk and its circumstances may be further refined by qualifications relating to time and place. For example, the parties may agree that the insurer will only be at risk for a certain time of day or limit,
define or add exclusions to the risk. An exclusion clause will stipulate that the insurer I will not be liable if the risk materialises under certain circumstances. A clause
providing that that insurer will not be liable for damage occurring to a vehicle whilst being driven by an unlicensed driver, is an example of an exclusion clause.
Author: P Havenga