n Tydskrif vir die Suid-Afrikaanse Reg - Extension clauses and indemnity insurance
2004 6 SA 21 (SCA) : regspraak

Volume 2012, Issue 2
  • ISSN : 0257-7747
  • E-ISSN: 1996-2207



At a certain point there was considerable uncertainty about the nature and effect of a so-called extension clause in a policy of indemnity insurance. In (1940 TPD 251) such a clause had been interpreted as a provision in favour of a third party, but this did not meet with general approval (see eg Kahn "Extension clauses in insurance contracts" 1952 53). This matter came to a head in the case.

The insured, JG Olieverspreiders (JGO), took out a motor vehicle policy from Santam. In terms of the policy Santam undertook to indemnify the insured against, among other things, liability incurred by the insured towards third parties for damage caused by the use of the insured vehicle. A further clause in the policy, termed an extension clause, extended such indemnity for liability to third parties also to "any person who is driving or using [the] vehicle on the insured's order or with the insured's permission ..." (par 4). This is what is known as the extension clause.

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