law enforces on the underwriter terms more favourable to the assured. The fewness of the international insurance markets of the world diminishes the need for uniform international regulations in this matter. The matter may be one for adjustment by variation in the rate of premium, but this is not certain.
The Glasgow conference of 1901 adopted the rules, after excepting time policies from the scope of the rule respecting seaworthiness. The rules are known as the Glasgow Marine Insurance Rules. The writer knows of no instance in which they have been adopted in practice.
Returning to marine insurance in the United Kingdom, it is to be observed that the passing of the Marine Insurance Act of 1906 sharply marks an important change in the nature of the law of the subject. Till then it was based almost entirely on common law, only a few disconnected points having been dealt with by statute. The reported cases were thus of great importance, and being about 2000 in number (teste Sir M. D. Chalmers) were not easy to master. No doubt many of them referred to commercial conditions no longer prevalent; still they could not be entirely ignored. But the original introducer of the bill described it as an endeavour “to reproduce as exactly as possible the existing law relating to marine insurance,” and as by being made law the language of the act has become authoritative, insured and insurers have now no call to go behind the wording of the act in any matter with which it deals. It thus appears that the case law of the subject existing before the 1st of January 1907 may be left aside, unless, perhaps, for use as affording examples of the way in which the provisions of the act work.
A contract of marine insurance is a contract of indemnity whereby the insurer undertakes to indemnify the insured, in the manner and to the extent agreed, against marine losses, i.e. the losses incident to marine adventure. The contract may by its express terms or by usage be extended Definition. to cover risks on inland waters or land risks incidental to any sea voyage. There is a “maritime adventure,” where any ship, goods or other movables are exposed to maritime perils, such property being termed “insurable property”; also where the earning of any freight, hire or other pecuniary profit or benefit, or the security for any loan or expenditure, is endangered by the exposure of insurable property to maritime perils; and where any liability to a third party may be incurred by the person interested in or responsible for insurable property by reason of its exposure to maritime perils. By “maritime perils” are meant the perils consequent on or incidental to the navigation of the sea, i.e. perils of the seas, fire, war perils, pirates, rovers, thieves, captures, seizures and restraints, and detainments of princes and peoples, jettisons, barratry, and any other perils, either of the like kind or which may be designated by the policy.
The contract being one of indemnity against maritime perils, it is evident that no one can derive benefit from it who has not some interest exposed to these perils. Consequently while, subject to the provisions of the act, every lawful marine adventure may be insured, all contracts of marine insurance are void when (1) the assured has no insurable interest, and has entered into the contract without expectation of acquiring such interest; (2) when the policy is a “wager” policy, being made “interest or no interest,” “without further proof of interest than the policy itself,” “without benefit of salvage to the insurer,” or subject to any similar terms. But if there is no possibility of salvage a policy “without benefit of salvage to the insurer” is legally valid. Wager policies are illegal only in the sense of being void to all legal purposes. They cannot be sued upon, hence they are known as “honour” policies. They are of frequent use, generally for the protection of interests which, though real, are not easily defined, or are of pecuniary value hard to determine. But they are ignored by the courts. The essential of insurable interest is the pecuniary advantage seen at the time of insurance as arising to the assured from the safety or due arrival of the adventure, or the pecuniary disadvantage similarly arising from its loss or deterioration. But such interest may lapse before arrival or destruction of the venture, and with the interest lapses the right of the assured to recover from the underwriter. Without interest at the time of the loss there is no right to recover from the underwriter. Should the assured simply transfer his interest to another, e.g. by sale, he can assign his policy to the party who acquires his interest—unless, of course, the policy contains terms expressly prohibiting assignment. The customary form of assignment is endorsement of the policy either in blank or to a specified party. Within the limits already named, interests are insurable whether complete or partial, defeasible or contingent; similarly loans on bottomry or respondentia, advance freight not repayable in case of loss, charges of insurance, also shipmaster’s, officers’ and seamen’s wages.
The owner of insurable property may insure its full value even though some third party have agreed or become liable to indemnify him in case of loss: a mortgagor has the same right of insuring to full value; while a mortgagee may insure only up to the sum due or to become due to him under the mortgage, unless Value. the mortgagee is insuring for the benefit of the mortgagor as well as for himself, in which case, even though he insure in his own name only, he may insure up to the full value. A consignee may insure in his own name the total amount of his interest and that of others for whose benefit he insures. Where no special contract is made between insured and underwriter, the insurable value of certain matters of insurance is ascertained as follows:—Ship—Her value at the commencement of the risk, including outfit, provisions, stores, advances of wages, and any other outlays expended to make the ship fit for the voyage or period of navigation covered, plus cost of insurance upon the whole. In the case of a steamship, the word “ship” includes machinery, boilers, coals and engine stores. In the case of a vessel engaged in a special trade, the word “ship” includes the ordinary fittings necessary for that trade. Freight (whether paid in advance or not)—The gross amount of freight at the risk of the assured, plus cost of insurance. Goods—The prime cost, plus expenses of and incidental to shipping and cost of insurance. Other interests—The amount at the insured’s risk when the policy attaches, plus cost of insurance.
To be admissible in evidence a contract of marine insurance must be embodied in a document called a policy, which must specify the name of the assured (or of his agent in the effecting of the policy), the objects insured, and the risk insured against, the voyage or time (or both) covered, the sum Policy. insured, the name of the assurers. The signature of the assurer is necessary; it is found at the end of the policy, and the assurer is often on this account called the underwriter. The objects insured must be designated with reasonable certainty, regard being had to customary usage. The undertaking to insure is usually expressed by saying that the insured or his agent “doth make assurance and cause himself to be insured.” The risks are either the whole body of maritime perils detailed above, or any one or set of these, or any other named peril against which the assured desires protection. There is no restriction by law of the length of voyage that may be insured, but time policies are, subject to the Finance Act 1901, invalid if made for more than one year; a voyage and a period of time may be covered on one policy. Policies are classed as “time” or “voyage” policies. It is not necessary to state in the policy the value of the objects insured, but generally the value is given; policies are therefore classed as “valued” or “unvalued,” the latter being often called “open” policies. The values of objects insured under open or unvalued policies are the insurable values given above. As it frequently happens that merchants desire to have all their shipments of whatever nature covered, by whatever vessel they may come, they require insurance in general terms; such a policy is termed a “floating” policy. It states the limits of voyage and value covered by the underwriter, and the class of ships to be employed. The particulars of each shipment are declared as the shipments occur, and in the order of despatch or shipment, the declarations being usually endorsed on the policy. All shipments within the terms of the policy must be declared at their honest value, or in accordance with the special provisions of the policy, if any. An omission or erroneous declaration may be corrected even after loss or arrival, provided it was made in good faith.
The consideration paid by the insured to the underwriter in return for the protection granted by the latter is called the premium. Until payment be made or tendered the policy is not ordinarily issuable, i.e. unless otherwise agreed. When the insured effects insurance with an underwriter through a broker, then, unless otherwise agreed, the broker is liable for the premium to the underwriter, who is, however, directly responsible to the assured for losses or liabilities falling on the policy and for returnable premium. But the broker has a lien on the policy for the premium and for his brokerage, and in case he has had dealings as a principal with the insured, he has a lien on the policy for any balance due to himself in insurance transactions, unless he should have known that in these transactions the insured was merely an agent. Some policy forms state definitely that the premium has been paid; when such a form is used and no fraud is proved, this receipt is binding between assured and underwriter, but not between broker and underwriter. If an insurance is effected at a premium “to be arranged,” and no
