Insurance law terminology explained

08 Jul 2021

Adams & Adams offers an extensive range of specialist services in the field of insurance law. A multi-disciplinary approach by our specialists allows us to provide clients with comprehensive legal advice pertaining to the insurance sector.

The following are common terms to familiarise yourself with should you require the assistance of an insurance lawyer.


The proposal form is an offer that is issued by the insurer and completed by the proposed insured. The form is compiled by the insurer based on the answers to a series of questions posed by the insurer. Using these answers, the insurer will calculate risk and make a formal offer. The proposal is written under duty of disclosure and therefore answers must be accurate and truthful in order to avoid a breach of contract.

Should there be bargaining involved in the initial discussion, prior to the signing of the proposal, matters must be settled before the proposal is finalised.

Bargaining can include:

  • The amount of insurance issued;
  • The period of insurance; and
  • Special circumstances related to risk.

It is also possible that either party may not accept the terms of the proposal as it stands, and therefore a counter offer may be made by the insurer. Prior to finalisation, the proposed insured individual may request a deletion or addition to the proposal.


Once both parties have reached an agreement in terms of the proposal, the insured individual will formally notify the insurer of the acceptance. From this point, the insurer will give the individual a policy, as well as a covering letter stating that the proposal has been accepted.


A policy is a document which states the terms of an insurance contract.


An insurance premium is the sum of money which is paid on a monthly basis by the individual to the insurance company.

Interim insurance

In some instances, the finalisation and conclusion of the insurance contract may only occur after a lengthy period of time. In that period, the individual is left vulnerable and will still require cover in the event of an incident that results in loss.

Interim insurance covers the individual until such time as a finalised contract has been initiated. This is common practice in short-term insurance. The contract serves as a valid insurance agreement and must comply with all of the requirements of a permanent insurance contract.

Insurance lawyers South Africa

For legal advice pertaining to insurance, Adams and Adams has a team of experts in various specialities that can assist. Contact us for more information or to book a consultation.

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(This article is provided for informational purposes only and not for the purpose of providing legal advice. For more information on the topic, please contact the author/s or the relevant provider.)
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