Unlimited Insurance

The matter below deals with an Insured, Mr R, whose insured car was stolen from the police parking lot because he was accused of shoplifting. The Insurer, Insurance Unlimited, rejected his claim based on the policy exclusion it was indicated that they do not indemnify any claims for loss or damage as a result of illegal activities or any crime. Mr. R was arrested for shoplifting when his motor vehicle was stolen. According to the police, the insured’s motor vehicle was used to transport the clothing items and hence he was arrested for using the vehicle in the commission of a crime. However, after further police investigation, all the charges against Mr R were dropped.

Unlimited Insurance still however rejected the claim as they stated that unlike the State, they do not need to prove their case beyond reasonable doubt, but merely on a balance of probabilities. They were satisfied that they had sufficiently established that the vehicle was used in the commission of a crime. The Ombudsman however disagreed stating that the withdrawal against the insured was unconditional. The insurer therefore took a decision to reject the insured’s claim at a time when no evidence was even led in a court of law. The insurer’s decision was not based on any material or reliable evidence. The proximate cause of loss of the vehicle was the theft of the vehicle by person’s unknown to the authorities.

Most businesses value their incorporeal assets (e.g. shares and claims with utmost importance). Claims refer to personal rights that a creditor has against a debtor, just as corporeal assets (e.g. land may be sold and transferred by delivery) incorporeal things such as claims can also be sold and transferred by cession. With the Unlimited Insurance and Mr R’s rights in mind, answer the question below:


Briefly discuss security by means of claims under clearly identified headings, namely pledge, fiduciary security cession and notarial bond claims. Use examples under each heading to substantiate and support your answer. (15 Marks)


Sam and Joe have recently engaged and plan on moving into a new home in Spring. They have agreed that they want to make an investment in this home, as it will be their family home in years to come. Joe’s gross income will not grant him the large mortgage that he requires to purchase the family home. Sam and Joe decide to request a joint mortgage from their bank. A mortgage is a loan from a bank or other financial institution that helps a borrower purchase a home. The collateral for the mortgage is the home itself, meaning that if the borrower does not make monthly payments to the lender and defaults on the loan, the bank can sell the home and recoup its money. Identify and provide a detailed discussion of the types of express mortgages that Joe and Sam would need to consider before requesting from their bank. Outline examples in each instance to support your answer. (15 Marks)

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