Views of Mr. T. H. Farrer.
A contract of marine insurance is in its essence a
contract of indemnity, and the spirit of the contract
is violated if the assured can make the occurrence
of a loss the means of gain. But the law has allowed
a very considerable deviation from this fundamental
principle. Mr. T. H. Farrer, in his evidence, happily
illustrates this in the case of a ship with a chartered
freight, bound from London to Calcutta and back.[1]
He supposes her to be lost on her outward passage
in the Bay of Biscay. Presuming that the owner
only insured her prudently and not exorbitantly, he
would recover in this case not merely the value of
the ship at the commencement of the voyage, but also
the freight of the outward and homeward voyages,
while he would be exempted from paying the seamen's
wages from the date of the disaster, the expenses
necessary to carry his ship to Calcutta, to remain
there, and to return on her homeward passage, so that
he would be, actually, a very considerable gainer by
the loss.[2] Nor is the matter less flagrant in the case
of valued policies, when the value of the property is
fixed by agreement beforehand between the assured
and the underwriter. The effect of this, as the Commissioners
justly remark,[3] is, "that unless the policy
is altogether void, on account of fraud, or the concealment
of a material fact, the assured can, in the
case of a total loss, receive the value which has been
- ↑ My readers should be informed that a premium of insurance on chartered freight out and home is much higher in proportion, than if insured out only, and then, after arrival at port of destination, home only.
- ↑ Royal Commission on Unseaworthy Ships, Appendix to the Report No. 51, and Questions 11,516 and 13,072.
- ↑ See 'Final Report,' p. 16.
