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Friday, 21 July 2017 09:00

Policy – Legal Contract or Not? Featured

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The 'Great Fire of London' was a disaster on a massive scale. The fire that swept the city destroyed 13,200 houses, 87 parish churches, St Paul's Cathedral and most of the buildings of the City authorities. It is estimated to have destroyed the homes of 70,000 of the City's 80,000 inhabitants. This event back in 1666 sparked the development of the insurance contract we have today.

Despite this contract essentially staying the same during this time, our clients still do not regard it as a contract! “I paid my premium, pay my claim!” is a comment easily bandied about. The questions that needs some further discussion are: 1.) What is a Contract? 2.) Does a Policy qualify as one?

What is a Contract?

A contract is legally enforceable if the following happens:

  1. Agreement – People agree on the contents
  2. Capacity – You must be legally able to sign
  3. Legality – May not be against the Laws of the Country
  4. Consideration – The value given in return for a promise

Does a Policy qualify as one?

  1. Agreement – Offer and Acceptance - The insured offer a premium, Insurer accept the premium.
  2. Capacity – The insured must be of legal age etc., Insurer has to be a registered insurer.
  3. Legality – Insured may not insure stolen goods and the policy wordings clearly state that the Laws of Namibia will determine how the policy responds.
  4. Consideration – The policy schedule clearly stipulate the value that the Insurer promises to pay.

It is interesting to note that the contract are active when the Insurer accepts the premium offered by the Insured and not before! It is therefore clear that the Policy ticks all the necessary boxes and thus our clients need to understand that the Insurer’s promise to pay are determined by the wording.

Quanta therefore relies heavily on the able shoulders of our brokers to serve as the informants, support crew and soothsayers to all clients.

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1 comment

  • Comment Link Newton Wednesday, 09 August 2017 10:06 posted by Newton

    Everything is very open with a clear description of the issues.

    It was really informative. Your website is extremely
    helpful. Thanks for sharing!

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At Quanta we care about you and ensuring you have all you need to be adequately insured and able to mange your risks effectively.
Feel free to join our mailing lists to receive our monthly Quanta newsletter with updates, news, events, new product info, promotions, blog updates and much more.
You may unsubscribe at any time via the link at the bottom of emails received or on our website.
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