LLB24126195 ALEX BANDA
2 FORMATION OF 1 DEFINITION 6 BROADER LEGAL
INSURANCE CONTRACTS DOCTRINES
offer and acceptance Insurance contracts and principles
The insured makes an offer through a proposal form, and are legal agreements governed by Contract Law: Insurance is based on offer,
the insurer accepts by issuing a policy or cover note. contract law and specific doctrines
Cases like Carlill v. Carbolic Smoke Ball Co (1893) and
acceptance, and consideration, ensuring
Newsholme Bros v. Road Transport Insurance (1929)
(such as good faith, insurable policies are legally binding agreements.
highlight enforceability and the need for truthful interest, and risk), ensuring Tort Law: Liability insurance provides
disclosure. fairness and protection between
consideration and capacity financial protection against claims arising
insurer and policyholder. In
The premium is the consideration, while both parties
Zambia, they are regulated under from negligence, accidents, or harm.
must have legal capacity to contract. Minors, mentally
incapacitated persons, or unauthorized agents cannot the Insurance Act, 2021 Commercial Law: Insurance manages
validly enter into such agreements. business risks, supporting commercial
In Zambia, these rules are reinforced by the Contracts activities and investment in sectors like
Act (s.3) and the Insurance Act, 2021 (Part II), which
regulate insurer and policyholder obligations. mining and agriculture.
INSURANCE
CONTRACTS &
PRINCIPLES UNIT 2
3 ELEMENTS OF AN 5 BROADERANALYSIS
CRITICAL LEGAL
INSURANCE CONTRACT DOCTRINES
Utmost Good Faith
Insurance contracts require full disclosure of all 4 DUTY OF DISCLOSURE
material facts. This higher duty prevents fraud and Critical Analysis: Insurance in Zambia
misrepresentation. In Carter v. Boehm (1766), the
boosts business confidence in
court established the principle of utmost good faith.
Section 20 of the Insurance Act, 2021, reinforces Pre-Contractual Disclosure agriculture, transport, and trade, while
this duty. The insured must reveal all material the PIA regulates the sector to ensure
Insurable Interest facts. Failure to do so can void the stability. Challenges include low
The insured must have a legal or financial interest in penetration, fraud, and poor
the subject matter. Without it, the policy is void. In
policy, as seen in Dawsons Ltd v.
Lucena v. Craufurd (1806), insurable interest was Bonnin (1922).the Insurance Act, awareness, but opportunities exist in
defined as a legal or pecuniary stake. Insurance Act, 2021 (s.20) enforces this. micro-insurance, digital policies, and
2021 (s.7) requires proof of such interest. Remedies for Non-Disclosure aligning with international best
Risk and Premium practices like the UK Insurance Act
Risk is the possibility of financial loss, while the If facts are hidden, the insurer may
premium is the price paid for coverage. Insurers cancel the contract or increase the 2015 to improve coverage and
calculate premiums based on risk assessment. In premium to match the risk. efficiency.
Macaura v. Northern Assurance (1925), the court
highlighted limits on what can be insured.