1. Define insurance and explain how a contract of insurance is concluded Definition of Insurance  Insurance is a contract in terms of which: - One party (the insurer) undertakes, in return for the payment of a premium by another party (the insured), to render to the insured a sum of money or its equivalent on the happening of a specified uncertain future event in which the insured has an interest. Key Features of Insurance:    Risk Covering Agreement: The purpose is to protect the insured against loss or damage resulting from an uncertain event (e.g., accident, theft, death). Payment of Premium: The insured pays a premium (a monetary amount) regularly or once-off. Indemnification or Benefit: On the occurrence of the insured event, the insurer provides: - An indemnity (e.g., reimbursement of loss — common in non-life insurance), or - A benefit (e.g., lump sum payment — common in life insurance). Conclusion of a Contract of Insurance  A contract of insurance is concluded in the same manner as any other contract — through the normal contractual principles of offer and acceptance. Steps involved: 1. The offer: - Usually made by the proposer (the prospective insured) by completing an application or proposal form. - This offer includes: the type of insurance, the amount of cover, details relevant to the risk (e.g., age, medical condition, value of property) 2. Acceptance by the insurer: - The insurer evaluates the risk based on the information provided. - The insurer may: Accept the proposal as is, reject it, or counteroffer with different terms (e.g., higher premium). - Once the insurer accepts the offer (or the proposer accepts the counteroffer), a binding contract is formed. 3. Issuance of the policy: - The insurer issues an insurance policy document, which contains the terms, conditions, exclusions, and benefits. - Although the policy is not essential for the conclusion of the contract (the contract is already valid upon agreement), it serves as evidence of the contract and its contents. 4. Payment of the premium: - Payment of the first premium is often a suspensive condition — cover typically begins only once payment is received, unless otherwise agreed. Important Principles Related to Insurance Contracts Uberrimae Fidei (Utmost Good Faith):    Insurance contracts are based on utmost good faith. The insured must disclose all material facts honestly and fully. Non-disclosure or misrepresentation can lead to voidance of the contract. Insurable Interest:  The insured must have an insurable interest in the subject matter of the insurance — a legal or financial interest that would be adversely affected by the loss or damage.