The definition of insurance according to South African law is: a contract between two parties—the insurer and the insured, whereby the insurer undertakes in return for the payment of a premium, to render to the insured a sum of money, or its equivalent, on the happening of a specified uncertain event in which the insured has some interest. The insured party should suffer a loss before a claim can be made, insurance is not for gain.

Insurance is the transfer of risk by means of which the responsibility for carrying a loss is transferred from the insured to the insurer on the payment of a premium. There are many conditions applicable in insurance, for example, the insured party must have an interest in the item he wishes to insure. You can insure your own car but not that of your neighbour as you have no interest in your neighbour’s car. An insurance policy is the legal document that acts as evidence of the contract of insurance between you and the insurance company.

Insurance originated in Greek bottomry contracts where a loan was taken on shipped merchandise to other countries. When this became illegal the Athens insurance exchange was formed. In 1347 AD marine insurance started in Italy – insurance has indeed been around for a long time.