MARINE INSURANCE. 65 MARINE INSURANCE. insurance. In all other forms of insurance of jiroperty the amount of in<iemnity that can be recovercJ in case of loss is dcterniined by the value of the pro2)erty destroyed, damnum emer- gens. In nuuine insurance it is possible to insure au expected gain and to obtain indemnity if the occurrence of any of the events covered by the policy makes it impossible to realize the gain, lucrum cessans. Danckhs. a marine policy covers a far greater number and variety of dangers than any otluT form of polii'V issued, licsidcs the more char- acteristic perils of (lie seas, such as wind and wave, lire, collision, stranding, jettison, and the like, the policy covers three distinct kinds of danger — war risks, including detention as well as capture or destruction; pirates, rovers, and thieves; and barratry, or illegal acts of captain or crew. As to the losses caused by the jierils of the sea, they must be due to extraordinary action of wind and wave, or to some other un- usual cause. The losses caused by ordinary forces are known as wear and tear, and are not covered by the insurance. The distinction be- tween the two kinds of losses has been the sub- ject of nuich litigation, and the present condi- tion of the law of the subject is precise but complex. Modern policies cover some further kinds of loss, especially liability for damages on account of collision. IN.SIRAXCE After the Loss. Uncertainty a.s to the fate of a vessel may continue for an indefinite time after the loss has occurred. Insurance may be taken out on an overdue ship, and even though it should afterwards appear that the ves- sel had already suffered shipwreck at the time when the insurance was effected the indemnity could still be collected. The premium rate on an overdue ship indicates the judgment of the underwriters as to the probability that the vessel has already sulTercd disaster. Rein.si RANCE. Individual underwriters enjoy to only a limited extent the advantages that come from the combination of a large number of risks in a group, and consequently single losses may involve a considerable share of their capital. They avoid this danger partly by underwriting only a small portion of, the value of each ship they insure, and partly by resorting to reinsurance. As it is always possible to insiire a ship as long as it is unknown whether she has suffered dis- aster or not. it is customary for those who have insurance in force on a vessel that is overdue to protect themselves by reinsuring her. They are naturally obliged to pay higher premiums than they themselves received. If this process of rein- surance is repeated several times, as is frequently the case, the effect is that a loss is distributed in small proportions over a large number of under writers. The Loss. Loss may be complete or partial. When it is complete the settlement between the insured and the underwriters is comparatively simple. On a valued policy an insurer becomes liable for the amount stated in the face of the policy. In the ease of an open policy it is neces- sary for the insured to prove the value of the property destroyed or the amount of freight lost. Unless otherwise agreed, (he value of the shij) is its value at the time of starting on the voyage with the value of the ship's stores included; the value of the cargo is its invoice value with the addition of insurance premium and other charges; and the value of the freight is the amount the ship would have earned if she had reached her destination in safety. AisA.NDONMENT. A peculiar feature of marine insurance is the practice of abandonment, when the insured surrenders or abandons to the under- writers the property covered by the policy and demands his entire indemnity. This right does not always exist, but arises only when the in- sured property has suffered so serious damage from perils covered by the policy that it amounts to 'constructive' total loss. With regard to the ship or the c:irgo there is held to be constructive total loss when the damage exceeds one-half the value of the ves.sel or cargo respectively, and when the vessel is captured by the enemy or de- tained by embargo. There is constructive total loss of cargo when it is so badly injured that it has to be sold at some other place than its orig- inal destination. There is constructive loss of freight when the ship is unable to complete her voyage, or the goods on which the freight is to be paid are so badly damaged that they cannot be carried to their original destination. When the conditions are such as to give a legal right to abandon, it is optional with the insured whether he will take advantage of the right or not. If he decides to do so he must give notice to the insurer wi(hin a reasonable time; and having once elected to abandon, it is im- possible for him to draw back. The effect of abandonment is (o ves( the title to the insured property in the underwriter and to convey (o liim all rights and claims on account of the shiji and cargo. Average. When there is partial loss and the insured cannot or does not elect to abandon and receive the entire indemnity, it becomes necessary to ascertain the amount for which the insurer is liable. Such partial losses are know^n by the name of average, a term borrowed by marine insurance from gcner.al maritime law. It is frequently necessary to sacrifice some part of the ship or cargo in order to save the rest. It is obviously unjust to have the entire burden of loss under such circumstances fall upon the party whose property is thus voluntarily destroyed or injured. Maritime law therefore prescribes the way in which such losses shall be apportioned or 'averaged' among all the interests at stake. The term average was later extended to include losses of all kinds. To distinguish those losses which are of such a nature that they ought to be apportioned among all the parties from (hose which ought to be borne entirely by the i)arty whose property is damaged, the former kind of loss is called general average, the latter particu- lar average. In the case of the ship, the volun- tary cutting away of a mast to save the ship would be general average; the loss of a mast through (he violence of the wind would be par- ticular average. There is general :iverage on the cargo when a part of it is jettisoned, or thrown overboard to lighten the ship; there is particular average when a part of it is damaged as the result of the action of forces which are included in the policy. So far as the insurance is con- cerned, it is the general rule that the insurer is liable for all general averages under all con- ditions, in the absence of fraud. His liability for particular average, however, is usuallv lim- ited in the policy. For certain kinds of com- modities the policy exempts the insurer from all
