Division 2Insurable Interest

An Act relating to Marine Insurance ## Part I—Preliminary #### 1 Short title and commencement \[see Note 1\] This Act may be cited as the Marine Insurance Act 1909 and shall commence on a day to be fixed by proclamation. #### 3 Interpretation In this Act, unless the contrary intention appears. > Action includes counterclaim and set‑off. > Freight includes the profit derivable by a ship‑owner from the employment of his or her ship to carry his or her own goods or movables, as well as freight payable by a third party, but does not include passage money. > Movables means any movable tangible property, other than the ship, and includes money, valuable securities, and other documents. > Policy means a marine policy. #### 4 Saving of rules of common law The rules of the common law, including the law merchant, save in so far as they are inconsistent with the express provisions of this Act, shall apply to contracts of marine insurance. #### 5 Application of certain Imperial and State Acts The Imperial Acts and State Acts set out in the First Schedule shall not to the extent therein specified apply to any contract or policy of marine insurance to which this Act applies. #### 6 Application of Act (1) This Act shall apply to marine insurance other than State marine insurance and to State marine insurance extending beyond the limits of the State concerned. (2) This Act does not apply to contracts of marine insurance made before the commencement of this Act. ## Part II—Marine Insurance ### Division 1—Limits of Marine Insurance #### 7 Marine insurance defined A contract of marine insurance is a contract whereby the insurer undertakes to indemnify the assured, in manner and to the extent thereby agreed, against marine losses, that is to say, the losses incident to marine adventure. #### 8 Mixed sea and land risks (1) A contract of marine insurance may, by its express terms, or by usage of trade, be extended so as to protect the assured against losses on inland waters or on any land risk which may be incidental to any sea voyage. (2) Where a ship in course of building, or the launch of a ship, or any adventure analogous to a marine adventure, is covered by a policy in the form of a marine policy, the provisions of this Act, in so far as applicable, shall apply thereto; but, except as by this section provided, nothing in this Act shall alter or affect any rule of law applicable to any contract of insurance other than a contract of marine insurance as by this Act defined. #### 9 Marine adventure and maritime perils defined (1) Subject to the provisions of this Act, every lawful marine adventure may be the subject of a contract of marine insurance. (2) In particular there is a marine adventure where: (a) any ship, goods, or other movables are exposed to maritime perils. Such property is in this Act referred to as insurable property; (b) the earning or acquisition of any freight, passage money, commission, profit, or other pecuniary benefit, or the security for any advances, loan, or disbursements, is endangered by the exposure of insurable property to maritime perils; (c) any liability to a third party may be incurred by the owner of, or other person interested in or responsible for, insurable property, by reason of maritime perils. > Maritime perils means the perils consequent on, or incidental to, the navigation of the sea, that is to say, perils of the seas, fire, war perils, pirates, rovers, thieves, captures, seizures, 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. ### Division 2—Insurable Interest #### 10 Avoidance of wagering or gaming contracts (1) Every contract of marine insurance by way of gaming or wagering is void. (2) A contract of marine insurance is deemed to be a gaming or wagering contract: (a) where the assured has not an insurable interest as defined by this Act, and the contract is entered into with no expectation of acquiring such an interest; or (b) where the policy is made interest or no interest, or without further proof of interest than the policy itself, or without benefit of salvage to the insurer, or subject to any other like term: Provided that, where there is no possibility of salvage, a policy may be effected without benefit of salvage to the insurer. #### 11 Insurable interest defined (1) Subject to the provisions of this Act, every person has an insurable interest who is interested in a marine adventure. (2) In particular, a person is interested in a marine adventure where he or she stands in any legal or equitable relation to the adventure, or to any insurable property at risk therein, in consequence of which he or she may benefit by the safety or due arrival of insurable property, or may be prejudiced by its loss, or by damage thereto, or by the detention thereof, or may incur liability in respect thereof. #### 12 When interest must attach (1) The assured must be interested in the subject‑matter insured at the time of the loss, though he or she need not be interested when the insurance is effected: Provided that where the subject‑matter is insured lost or not lost, the assured may recover although he or she may not have acquired his or her interest until after the loss, unless at the time of effecting the contract of insurance the assured was aware of the loss, and the insurer was not. (2) Where the assured has no interest at the time of the loss, he or she cannot acquire interest by any act or election after he or she is aware of the loss. #### 13 Defeasible or contingent interest (1) A defeasible interest is insurable, as also is a contingent interest. (2) In particular, where the buyer of goods has insured them, he or she has an insurable interest, notwithstanding that he or she might, at his or her election, have rejected the goods, or have treated them as at the seller’s risk, by reason of the latter’s delay in making delivery or otherwise. #### 14 Partial interest A partial interest of any nature is insurable. #### 15 Re‑insurance (1) The insurer under a contract of marine insurance has an insurable interest in his or her risk, and may re‑insure in respect of it. (2) Unless the policy otherwise provides, the original assured has no right or interest in respect of such re‑insurance. #### 16 Bottomry The lender of money on bottomry or respondentia has an insurable interest in respect of the loan. #### 17 Master’s and seamen’s wages The master or any member of the crew of a ship has an insurable interest in respect of his or her wages. #### 18 Advance freight In the case of advance freight, the person advancing the freight has an insurable interest, in so far as such freight is not repayable in case of loss. #### 19 Charges of insurance The assured has an insurable interest in the charges of any insurance which he or she may effect. #### 20 Quantum of interest (1) Where the subject‑matter insured is mortgaged, the mortgagor has an insurable interest in the full value thereof, and the mortgagee has an insurable interest in respect of any sum due or to become due under the mortgage. (2) A mortgagee, consignee, or other person having an interest in the subject‑matter insured may insure on behalf and for the benefit of other persons interested as well as for his or her own benefit. (3) The owner of insurable property has an insurable interest in respect of the full value thereof, notwithstanding that some third person may have agreed, or be liable, to indemnify him or her in case of loss. #### 21 Assignment of interest Where the assured assigns or otherwise parts with his or her interest in the subject‑matter insured, he or she does not thereby transfer to the assignee his or her rights under the contract of insurance, unless there be an express or implied agreement with the assignee to that effect. But the provisions of this section do not affect a transmission of interest by operation of law. ### Division 3—Insurable Value #### 22 Measure of insurable value Subject to any express provision or valuation in the policy, the insurable value of the subject‑matter insured must be ascertained as follows: (a) In insurance on a ship, the insurable value is the value, at the commencement of the risk, of the ship, including her outfit, provisions and stores for the officers and crew, money advanced for seamen’s wages, and other disbursements (if any) incurred to make the ship fit for the voyage or adventure contemplated by the policy, plus the charges of insurance upon the whole: The insurable value, in the case of a steam‑ship, includes also the machinery, boilers, and coals and engine stores if owned by the assured, and, in the case of a ship engaged in a special trade, the ordinary fittings requisite for that trade: (b) In insurance on freight, whether paid in advance or otherwise, the insurable value is the gross amount of the freight at the risk of the assured, plus the charges of insurance: (c) In insurance on goods or merchandise, the insurable value is the prime cost of the property insured, plus the expenses of and incidental to shipping and the charges of insurance upon the whole: (d) In insurance on any other subject‑matter, the insurable value is the amount at the risk of the assured when the policy attaches, plus the charges of insurance. ### Division 4—Disclosure and Representations #### 23 Insurance is uberrimae fidei A contract of marine insurance is a contract based upon the utmost good faith, and, if the utmost good faith be not observed by either party, the contract may be avoided by the other party. #### 24 Disclosure by assured (1) Subject to the provisions of this section, the assured must disclose to the insurer, before the contract is concluded, every material circumstance which is known to the assured, and the assured is deemed to know every circumstance which, in the ordinary course of business, ought to be known by him or her. If the assured fails to make such disclosure, the insurer may avoid the contract. (2) Every circumstance is material which would influence the judgment of a prudent insurer in fixing the premium, or determining whether he or she will take the risk. (3) In the absence of inquiry the following circumstances need not be disclosed, namely: (a) Any circumstance which diminishes the risk; (b) Any circumstance which is known or presumed to be known to the insurer. The insurer is presumed to know matters of common notoriety or knowledge, and matters which an insurer in the ordinary course of his or her business, as such, ought to know; (c) Any circumstance as to which information is waived by the insurer; (d) Any circumstance which it is superfluous to disclose by reason of any express or implied warranty. (4) Whether any particular circumstance, which is not disclosed, be material or not is, in each case, a question of fact. (5) The term circumstance includes any communication made to, or information received by, the assured. #### 25 Disclosure by agent effecting insurance Subject to the provisions of the preceding section as to circumstances which need not be disclosed, where an insurance is effected for the assured by an agent, the agent must disclose to the insurer: (a) every material circumstance which is known to himself or herself, and an agent to insure is deemed to know every circumstance which in the ordinary course of business ought to be known by, or to have been communicated to, him or her; and (b) every material circumstance which the assured is bound to disclose, unless it come to his or her knowledge too late to communicate it to the agent. #### 26 Representations pending negotiation of contract (1) Every material representation made by the assured or his or her agent to the insurer during the negotiations for the contract, and before the contract is concluded, must be true. If it be untrue the insurer may avoid the contract. (2) A representation is material which would influence the judgment of a prudent insurer in fixing the premium, or determining whether he or she will take the risk. (3) A representation may be either as to a matter of fact, or as to a matter of expectation or belief. (4) A representation as to a matter of fact is true, if it be substantially correct, that is to say, if the difference between what is represented and what is actually correct would not be considered material by a prudent insurer. (5) A representation as to a matter of expectation or belief is true if it be made in good faith. (6) A representation may be withdrawn or corrected before the contract is concluded. (7) Whether a particular representation be material or not is, in each case, a question of fact. #### 27 When contract is deemed to be concluded A contract of marine insurance is deemed to be concluded when the proposal of the assured is accepted by the insurer, whether the policy be then issued or not; and for the purpose of showing when the proposal was accepted, reference may be made to the slip or covering note or other customary memorandum of the contract. ### Division 5—The Policy #### 28 Contract must be embodied in policy Subject to the provisions of any Act, a contract of marine insurance is inadmissible in evidence in an action for the recovery of a loss under the contract unless it is embodied in a marine policy in accordance with this Act. The policy may be executed and issued either at the time when the contract is concluded or afterwards. #### 29 What policy must specify A marine policy must specify: (a) the name of the assured, or of some person who effects the insurance on his or her behalf: (b) the subject‑matter insured and the risk insured against: (c) the voyage, or period of time, or both, as the case may be, covered by the insurance: (d) the sum or sums insured: (e) the name or names of the insurers. #### 30 Signature of insurer (1) A marine policy must be signed by or on behalf of the insurer, provided that in the case of a corporation the corporate seal may be sufficient, but nothing in this section shall be construed as requiring the subscription of a corporation to be under seal. (2) Where a policy is subscribed by or on behalf of two or more insurers, each subscription, unless the contrary be expressed, constitutes a distinct contract with the assured. #### 31 Voyage and time policies (1) Where the contract is to insure the subject‑matter at and from, or from one place to another place or to other places, the policy is called a voyage policy, and where the contract is to insure the subject‑matter for a definite period of time the policy is called a time policy. A contract for both voyage and time may be included in the same policy. (2) A time policy which is made for any time exceeding twelve months is invalid. Provided that a time policy may contain an agreement to the effect that, in the event of the ship being at sea or the voyage being otherwise not completed on the expiration of the policy, the subject‑matter of the insurance shall be held covered until the arrival of the ship at her destination, or for a reasonable time thereafter not exceeding thirty days; and the policy shall not be invalid on the ground only that by reason of such agreement it may become available for a period exceeding twelve months. #### 32 Designation of subject‑matter (1) The subject‑matter insured must be designated in a marine policy with reasonable certainty. (2) The nature and extent of the interest of the assured in the subject‑matter insured need not be specified in the policy. (3) Where the policy designates the subject‑matter insured in general terms, it shall be construed to apply to the interest intended by the assured to be covered. (4) In the application of this section regard shall be had to any usage regulating the designation of the subject‑matter insured. #### 33 Valued policy (1) A policy may be either valued or unvalued. (2) A valued policy is a policy which specifies the agreed value of the subject‑matter insured. (3) Subject to the provisions of this Act, and in the absence of fraud, the value fixed by the policy is, as between the insurer and assured, conclusive of the insurable value of the subject intended to be insured, whether the loss be total or partial. (4) Unless the policy otherwise provides, the value fixed by the policy is not conclusive for the purpose of determining whether there has been a constructive total loss. #### 34 Unvalued policy An unvalued policy is a policy which does not specify the value of the subject‑matter insured, but, subject to the limit of the sum insured, leaves the insurable value to be subsequently ascertained, in the manner hereinbefore specified. #### 35 Floating policy by ship or ships (1) A floating policy is a policy which describes the insurance in general terms, and leaves the name of the ship or ships and other particulars to be defined by subsequent declaration. (2) The subsequent declaration or declarations may be made by indorsement on the policy, or in other customary manner. (3) Unless the policy otherwise provides, the declarations must be made in the order of despatch or shipment. They must, in the case of goods, comprise all consignments within the terms of the policy, and the value of the goods or other property must be honestly stated, but an omission or erroneous declaration may be rectified even after loss or arrival, provided the omission or declaration was made in good faith. (4) Unless the policy otherwise provides, where a declaration of value is not made until after notice of loss or arrival, the policy must be treated as an unvalued policy as regards the subject‑matter of that declaration. #### 36 Construction of terms in policy (1) A policy may be in the form in the Second Schedule. (2) Subject to the provisions of this Act, and unless the context of the policy otherwise requires, the terms and expressions mentioned in the Second Schedule shall be construed as having the scope and meaning in that Schedule assigned to them. #### 37 Premium to be arranged (1) Where an insurance is effected at a premium to be arranged, and no arrangement is made, a reasonable premium is payable. (2) Where an insurance is effected on the terms that an additional premium is to be arranged in a given event, and that event happens but no arrangement is made, then a reasonable additional premium is payable. ### Division 6—Double Insurance #### 38 Double insurance (1) Where two or more policies are effected by or on behalf of the assured on the same adventure and interest or any part thereof, and the sums insured exceed the indemnity allowed by this Act, the assured is said to be over‑insured by the double insurance. (2) Where the assured is over‑insured by double insurance: (a) the assured, unless the policy otherwise provides, may claim payment from the insurers in such order as he or she may think fit, provided that he or she is not entitled to receive any sum in excess of the indemnity allowed by this Act; (b) where the policy under which the assured claims is a valued policy, the assured must give credit, as against the valuation, for any sum received by him or her under any other policy, without regard to the actual value of the subject‑matter insured; (c) where the policy under which the assured claims is an unvalued policy, he or she must give credit, as against the full insurable value, for any sum received by him or her under any other policy; (d) where the assured receives any sum in excess of the indemnity allowed by this Act, he or she is deemed to hold such sum in trust for the insurers, according to their right of contribution among themselves. ### Division 7—Warranties #### 39 Nature of warranty (1) A warranty, in the following sections relating to warranties, means a promissory warranty, that is to say a warranty by which the assured undertakes that some particular thing shall or shall not be done, or that some conditions shall be fulfilled, or whereby he or she affirms or negatives the existence of a particular state of facts. (2) A warranty may be express or implied. (3) A warranty, as above defined, is a condition which must be exactly complied with, whether it be material to the risk or not. If it be not so complied with, then, subject to any express provision in the policy, the insurer is discharged from liability as from the date of the breach of warranty, but without prejudice to any liability incurred by him or her before that date. #### 40 When breach of warranty excused (1) Non‑compliance with a warranty is excused when, by reason of a change of circumstances, the warranty ceases to be applicable to the circumstances of the contract, or when compliance with the warranty is rendered unlawful by any subsequent law. (2) Where a warranty is broken, the assured cannot avail himself or herself of the defence that the breach has been remedied, and the warranty complied with, before loss. (3) A breach of warranty may be waived by the insurer. #### 41 Express warranties (1) An express warranty may be in any form of words from which the intention to warrant is to be inferred. (2) An express warranty must be included in, or written upon, the policy, or must be contained in some document incorporated by reference into the policy. (3) An express warranty does not exclude an implied warranty, unless it be inconsistent therewith. #### 42 Warranty of neutrality (1) Where insurable property, whether ship or goods, is expressly warranted neutral, there is an implied condition that the property shall have a neutral character at the commencement of the risk, and that, so far as the assured can control the matter, its neutral character shall be preserved during the risk. (2) Where a ship is expressly warranted neutral there is also an implied condition that, so far as the assured can control the matter, she shall be properly documented, that is to say, that she shall carry the necessary papers to establish her neutrality, and that she shall not falsify or suppress her papers, or use simulated papers. If any loss occurs through breach of this condition, the insurer may avoid the contract. #### 43 No implied warranty of nationality There is no implied warranty as to the nationality of a ship, or that her nationality shall not be changed during the risk. #### 44 Warranty of good safety Where the subject‑matter insured is warranted well or in good safety on a particular day, it is sufficient if it be safe at any time during that day. #### 45 Warranty of seaworthiness of ship (1) In a voyage policy there is an implied warranty that at the commencement of the voyage the ship shall be seaworthy for the purpose of the particular adventure insured. (2) Where the policy attaches while the ship is in port, there is also an implied warranty that she shall, at the commencement of the risk, be reasonably fit to encounter the ordinary perils of the port. (3) Where the policy relates to a voyage which is performed in different stages, during which the ship requires different kinds of or further preparation or equipment, there is an implied warranty that at the commencement of each stage the ship is seaworthy in respect of such preparation or equipment for the purposes of that stage. (4) A ship is deemed to be seaworthy when she is reasonably fit in all respects to encounter the ordinary perils of the seas of the adventure insured. (5) In a time policy there is no implied warranty that the ship shall be seaworthy at any stage of the adventure, but where, with the privity of the assured, the ship is sent to sea in an unseaworthy state, the insurer is not liable for any loss attributable to unseaworthiness. #### 46 No implied warranty that goods are seaworthy (1) In a policy on goods or other movables there is no implied warranty that the goods or movables are seaworthy. (2) In a voyage policy on goods or other movables there is an implied warranty that at the commencement of the voyage the ship is not only seaworthy as a ship, but also that she is reasonably fit to carry the goods or other movables to the destination contemplated by the policy. #### 47 Warranty of legality There is an implied warranty that the adventure insured is a lawful one, and that, so far as the assured can control the matter, the adventure shall be carried out in a lawful manner. ### Division 8—The Voyage #### 48 Implied condition as to commencement of risk (1) Where the subject‑matter is insured by a voyage policy at and from or from a particular place, it is not necessary that the ship should be at that place when the contract is concluded, but there is an implied condition that the adventure shall be commenced within a reasonable time, and that if the adventure be not so commenced the insurer may avoid the contract. (2) The implied condition may be negatived by showing that the delay was caused by circumstances known to the insurer before the contract was concluded, or by showing that he or she waived the condition. #### 49 Alteration of port of departure Where the place of departure is specified by the policy, and the ship instead of sailing from that place sails from any other place, the risk does not attach. #### 50 Sailing for different destination Where the destination is specified in the policy, and the ship, instead of sailing for that destination, sails for any other destination, the risk does not attach. #### 51 Change of voyage (1) Where, after the commencement of the risk, the destination of the ship is voluntarily changed from the destination contemplated by the policy, there is said to be a change of voyage. (2) Unless the policy otherwise provides, where there is a change of voyage, the insurer is discharged from liability as from the time of change, that is to say, as from the time when the determination to change it is manifested; and it is immaterial that the ship may not in fact have left the course of voyage contemplated by the policy when the loss occurs. #### 52 Deviation (1) Where a ship, without lawful excuse, deviates from the voyage contemplated by the policy, the insurer is discharged from liability as from the time of deviation, and it is immaterial that the ship may have regained her route before any loss occurs. (2) There is a deviation from the voyage contemplated by the policy: (a) where the course of the voyage is specifically designated by the policy, and that course is departed from; or (b) where the course of the voyage is not specifically designated by the policy, but the usual and customary course is departed from. (3) The intention to deviate is immaterial; there must be a deviation in fact to discharge the insurer from his or her liability under the contract. #### 53 Several ports of discharge (1) Where several ports of discharge are specified by the policy, the ship may proceed to all or any of them, but, in the absence of any usage or sufficient cause to the contrary, she must proceed to them, or such of them as she goes to, in the order designated by the policy. If she does not there is a deviation. (2) Where the policy is to ports of discharge, within a given area, which are not named, the ship must, in the absence of any usage or sufficient cause to the contrary, proceed to them, or such of them as she goes to, in their geographical order. If she does not there is a deviation. #### 54 Delay in voyage In the case of a voyage policy, the adventure insured must be prosecuted throughout its course with reasonable despatch, and, if without lawful excuse it is not so prosecuted, the insurer is discharged from liability as from the time when the delay became unreasonable. #### 55 Excuses for deviation or delay (1) Deviation or delay in prosecuting the voyage contemplated by the policy is excused: (a) where authorized by any special term in the policy; or (b) where caused by circumstances beyond the control of the master and his or her employer; or (c) where reasonably necessary in order to comply with an express or implied warranty; or (d) where reasonably necessary for the safety of the ship or subject‑matter insured; or (e) for the purpose of saving human life, or aiding a ship in distress where human life may be in danger; or (f) where reasonably necessary for the purpose of obtaining medical or surgical aid for any person on board the ship; or (g) where caused by the barratrous conduct of the master or crew, if barratry be one of the perils insured against. (2) When the cause excusing the deviation or delay ceases to operate, the ship must resume her course, and prosecute her voyage, with reasonable despatch. ## Part III—Assignment of Policy #### 56 When and how policy is assignable (1) A marine policy is assignable unless it contains terms expressly prohibiting assignment. It may be assigned either before or after loss. (2) Where a marine policy has been assigned so as to pass the beneficial interest in the policy, the assignee of the policy is entitled to sue thereon in his or her own name; and the defendant is entitled to make any defence arising out of the contract which he or she would have been entitled to make if the action had been brought in the name of the person by or on behalf of whom the policy was effected. (3) A marine policy may be assigned by indorsement thereon or in other customary manner. #### 57 Assured who has no interest cannot assign Where the assured has parted with or lost his or her interest in the subject‑matter insured, and has not, before or at the time of so doing, expressly or impliedly agreed to assign the policy, any subsequent assignment of the policy is inoperative: Provided that nothing in this section affects the assignment of a policy after loss. ## Part IV—The Premium #### 58 When premium payable Unless otherwise agreed, the duty of the assured or his or her agent to pay the premium, and the duty of the insurer to issue the policy to the assured or his or her agent, are concurrent conditions, and the insurer is not bound to issue the policy until payment or tender of the premium. ## Part V—Loss and Abandonment ### Division 1—General #### 61 Included and excluded losses (1) Subject to the provisions of this Act, and unless the policy otherwise provides, the insurer is liable for any loss proximately caused by a peril insured against, but, subject as aforesaid, he or she is not liable for any loss which is not proximately caused by a peril insured against. (2) In particular: (a) the insurer is not liable for any loss attributable to the wilful misconduct of the assured, but, unless the policy otherwise provides, he or she is liable for any loss proximately caused by a peril insured against, even though the loss would not have happened but for the misconduct or negligence of the master or crew; (b) unless the policy otherwise provides, the insurer on ship or goods is not liable for any loss proximately caused by delay, although the delay be caused by a peril insured against; (c) unless the policy otherwise provides, the insurer is not liable for ordinary wear and tear, ordinary leakage and breakage, inherent vice or nature of the subject‑matter insured, or for any loss proximately caused by rats or vermin, or for any injury to machinery not proximately caused by maritime perils. #### 62 Partial and total loss (1) A loss may be either total or partial. Any loss other than a total loss, as hereinafter defined, is a partial loss. (2) A total loss may be either an actual total loss, or a constructive total loss. (3) Unless a different intention appears from the terms of the policy, an insurance against total loss includes a constructive, as well as an actual, total loss. (4) Where the assured brings an action for a total loss and the evidence proves only a partial loss, he or she may, unless the policy otherwise provides, recover for a partial loss. (5) Where goods reach their destination in specie, but, by reason of obliteration of marks, or otherwise, they are incapable of identification, the loss, if any, is partial, and not total. #### 63 Actual total loss (1) Where the subject‑matter insured is destroyed, or so damaged as to cease to be a thing of the kind insured, or where the assured is irretrievably deprived thereof, there is an actual total loss. (2) In the case of an actual total loss no notice of abandonment need be given. #### 64 Missing ship Where the ship concerned in the adventure is missing, and after the lapse of a reasonable time no news of her has been received, an actual total loss may be presumed. #### 65 Effect of transhipment etc. Where, by a peril insured against, the voyage is interrupted at an intermediate port or place, under such circumstances as, apart from any special stipulation in the contract of affreightment, to justify the master in landing and re‑shipping the goods or other movables, or in transhipping them, and sending them on to their destination, the liability of the insurer continues, notwithstanding the landing or transhipment. #### 66 Constructive total loss defined (1) Subject to any express provision in the policy, there is a constructive total loss where the subject‑matter insured is reasonably abandoned on account of its actual total loss appearing to be unavoidable, or because it could not be preserved from actual total loss without an expenditure which would exceed its value when the expenditure had been incurred. (2) In particular, there is a constructive total loss: (a) where the assured is deprived of the possession of his or her ship or goods by a peril insured against, and (i) it is unlikely that he or she can recover the ship or goods, as the case may be; or (ii) the cost of recovering the ship or goods, as the case may be, would exceed their value when recovered; or (b) in the case of damage to a ship, where she is so damaged by a peril insured against that the cost of repairing the damage would exceed the value of the ship when repaired. In estimating the cost of repairs, no deduction is to be made in respect of general average contributions to those repairs payable by other interests, but account is to be taken of the expense of future salvage operations and of any future general average contribution to which the ship would be liable if repaired; or (c) in the case of damage to goods, where the cost of repairing the damage and forwarding the goods to their destination would exceed their value on arrival. #### 67 Effect of constructive total loss Where there is a constructive total loss, the assured may either treat the loss as a partial loss, or abandon the subject‑matter insured to the insurer and treat the loss as if it were an actual total loss. #### 68 Notice of abandonment (1) Subject to the provisions of this section, where the assured elects to abandon the subject‑matter insured to the insurer, he or she must give notice of abandonment. If he or she fails to do so the loss can only be treated as a partial loss. (2) Notice of abandonment may be given in writing, or by word of mouth, or partly in writing and partly by word of mouth, and may be given in any terms which indicate the intention of the assured to abandon his or her insured interest in the subject‑matter insured unconditionally to the insurer. (3) Notice of abandonment must be given with reasonable diligence after the receipt of reliable information of the loss, but where the information is of a doubtful character the assured is entitled to a reasonable time to make inquiry. (4) Where notice of abandonment is properly given, the rights of the assured are not prejudiced by the fact that the insurer refuses to accept the abandonment. (5) The acceptance of an abandonment may be either express or implied from the conduct of the insurer. The mere silence of the insurer after notice is not an acceptance. (6) Where notice of abandonment is accepted the abandonment is irrevocable. The acceptance of the notice conclusively admits liability for the loss and the sufficiency of the notice. (7) Notice of abandonment is unnecessary where, at the time when the assured receives information of the loss, there would be no possibility of benefit to the insurer if notice were given to him or her. (8) Notice of abandonment may be waived by the insurer. (9) Where an insurer has re‑insured his or her risk, no notice of abandonment need be given by him or her. #### 69 Effect of abandonment (1) Where there is a valid abandonment the insurer is entitled to take over the interest of the assured in whatever may remain of the subject‑matter insured, and all proprietary rights incidental thereto. (2) Upon the abandonment of a ship, the insurer thereof is entitled to any freight in course of being earned, and which is earned by her subsequent to the casualty causing the loss, less the expenses of earning it incurred after the casualty; and, where the ship is carrying the owner’s goods, the insurer is entitled to a reasonable remuneration for the carriage of them subsequent to the casualty causing the loss. ### Division 2—Partial Losses (including Salvage, General Average, and Particular Charges) #### 70 Particular average loss (1) A particular average loss is a partial loss of the subject‑matter insured, caused by a peril insured against, and which is not a general average loss. (2) Expenses incurred by or on behalf of the assured for the safety or preservation of the subject‑matter insured, other than general average and salvage charges, are called particular charges. Particular charges are not included in particular average. #### 71 Salvage charges (1) Subject to any express provision in the policy, salvage charges incurred in preventing a loss by perils insured against may be recovered as a loss by those perils. (2) Salvage charges means the charges recoverable under maritime law by a salvor independently of contract. They do not include the expenses of services in the nature of salvage rendered by the assured or his or her agents, or any person employed for hire by them, for the purpose of averting a peril insured against. Such expenses, where properly incurred, may be recovered as particular charges or as a general average loss, according to the circumstances under which they were incurred. #### 72 General average loss (1) A general average loss is a loss caused by or directly consequential on a general average act. It includes a general average expenditure as well as a general average sacrifice. (2) There is a general average act where any extraordinary sacrifice or expenditure is voluntarily and reasonably made or incurred in time of peril for the purpose of preserving the property imperilled in the common adventure. (3) Where there is a general average loss, the party on whom it falls is entitled, subject to the conditions imposed by maritime law, to a rateable contribution from the other parties interested, and such contribution is called a general average contribution. (4) Subject to any express provision in the policy, where the assured has incurred a general average expenditure, he or she may recover from the insurer in respect of the proportion of the loss which falls upon him or her; and, in the case of a general average sacrifice, he or she may recover from the insurer in respect of the whole loss without having enforced his or her right of contribution from the other parties liable to contribute. (5) Subject to any express provision in the policy, where the assured has paid, or is liable to pay, a general average contribution in respect of the subject insured he or she may recover therefor from the insurer. (6) In the absence of express stipulation, the insurer is not liable for any general average loss or contribution where the loss was not incurred for the purpose of avoiding, or in connexion with the avoidance of, a peril insured against. (7) Where ship, freight, and cargo, or any two of those interests, are owned by the same assured, the liability of the insurer in respect of general average losses or contributions is to be determined as if those subjects were owned by different persons. ## Part VI—Measure of Indemnity ### Division 1—Liability of Insurer for Loss #### 73 Extent of liability of insurer for loss (1) The sum which the assured can recover in respect of a loss on a policy by which he or she is insured, in the case of an unvalued policy to the full extent of the insurable value, or, in the case of a valued policy to the full extent of the value fixed by the policy, is called the measure of indemnity. (2) Where there is a loss recoverable under the policy, the insurer, or each insurer if there be more than one, is liable for such proportion of the measure of indemnity as the amount of his or her subscription bears to the value fixed by the policy in the case of a valued policy, or to the insurable value in the case of an unvalued policy. #### 74 Total loss Subject to the provisions of this Act and to any express provision in the policy, where there is a total loss of the subject‑matter insured: (a) if the policy be a valued policy, the measure of indemnity is the sum fixed by the policy: (b) if the policy be an unvalued policy, the measure of indemnity is the insurable value of the subject‑matter insured. #### 75 Partial loss of ship Where a ship is damaged, but is not totally lost, the measure of indemnity, subject to any express provision in the policy, is as follows: (a) Where the ship has been repaired, the assured is entitled to the reasonable cost of the repairs, less the customary deductions, but not exceeding the sum insured in respect of any one casualty: (b) Where the ship has been only partially repaired, the assured is entitled to the reasonable cost of such repairs, computed as above, and also to be indemnified for the reasonable depreciation, if any, arising from the unrepaired damage, provided that the aggregate amount shall not exceed the cost of repairing the whole damage, computed as above: (c) Where the ship has not been repaired, and has not been sold in her damaged state during the risk, the assured is entitled to be indemnified for the reasonable depreciation arising from the unrepaired damage, but not exceeding the reasonable cost of repairing such damage, computed as above. #### 76 Partial loss of freight Subject to any express provision in the policy, where there is a partial loss of freight, the measure of indemnity is such proportion of the sum fixed by the policy in the case of a valued policy, or of the insurable value in the case of an unvalued policy, as the proportion of freight lost by the assured bears to the whole freight at the risk of the assured under the policy. #### 77 Partial loss of goods, merchandise etc. Where there is a partial loss of goods, merchandise, or other movables, the measure of indemnity, subject to any express provision in the policy, is as follows: (a) Where part of the goods, merchandise, or other movables insured by a valued policy is totally lost, the measure of indemnity is such proportion of the sum fixed by the policy as the insurable value of the part lost bears to the insurable value of the whole, ascertained as in the case of an unvalued policy; (b) Where part of the goods, merchandise, or other movables insured by an unvalued policy is totally lost, the measure of indemnity is the insurable value of the part lost, ascertained as in case of total loss; (c) Where the whole or any part of the goods or merchandise insured has been delivered damaged at its destination, the measure of indemnity is such proportion of the sum fixed by the policy in the case of a valued policy, or of the insurable value in the case of an unvalued policy, as the difference between the gross sound and damaged values at the place of arrival bears to the gross sound value. (d) Gross value means the wholesale price or, if there be no such price, the estimated value, with, in either case, freight, landing charges, and duty paid beforehand; provided that, in the case of goods or merchandise customarily sold in bond, the bonded price is deemed to be the gross value. Gross proceeds means the actual price obtained at a sale where all charges on sale are paid by the sellers. #### 78 Apportionment of valuation (1) Where different species of property are insured under a single valuation, the valuation must be apportioned over the different species in proportion to their respective insurable values, as in the case of an unvalued policy. The insured value of any part of a species is such proportion of the total insured value of the species as the insurable value of the part bears to the insurable value of the whole, ascertained in both cases as provided by this Act. (2) Where a valuation has to be apportioned, and particulars of the prime cost of each separate species, quality, or description of goods cannot be ascertained, the division of the valuation may be made over the net arrived sound values of the different species, qualities, or descriptions of goods. #### 79 General average contributions and salvage charges (1) Subject to any express provision in the policy, where the assured has paid, or is liable for, any general average contribution, the measure of indemnity is the full amount of such contribution, if the subject‑matter liable to contribution is insured for its full contributory value; but, if such subject‑matter be not insured for its full contributory value, or if only part of it be insured, the indemnity payable by the insurer must be reduced in proportion to the under insurance, and where there has been a particular average loss which constitutes a deduction from the contributory value, and for which the insurer is liable, that amount must be deducted from the insured value in order to ascertain what the insurer is liable to contribute. (2) Where the insurer is liable for salvage charges the extent of his or her liability must be determined on the like principle. #### 80 Liabilities to third parties Where the assured has effected an insurance in express terms against any liability to a third party, the measure of indemnity, subject to any express provision in the policy, is the amount paid or payable by him or her to such third party in respect of such liability. #### 81 General provisions as to measure of indemnity (1) Where there has been a loss in respect of any subject‑matter not expressly provided for in the foregoing provisions of this Act, the measure of indemnity shall be ascertained, as nearly as may be, in accordance with those provisions, in so far as applicable to the particular case. (2) Nothing in the provisions of this Act relating to the measure of indemnity shall affect the rules relating to double insurance, or prohibit the insurer from disproving interest wholly or in part, or from showing that at the time of the loss the whole or any part of the subject‑matter insured was not at risk under the policy. #### 82 Particular average warranties (1) Where the subject‑matter insured is warranted free from particular average, the assured cannot recover for a loss of part, other than a loss incurred by a general average sacrifice, unless the contract contained in the policy be apportionable; but, if the contract be apportionable, the assured may recover for a total loss of any apportionable part. (2) Where the subject‑matter insured is warranted free from particular average, either wholly or under a certain percentage, the insurer is nevertheless liable for salvage charges, and for particular charges and other expenses properly incurred pursuant to the provisions of the suing and labouring clause in order to avert a loss insured against. (3) Unless the policy otherwise provides, where the subject‑matter insured is warranted free from particular average under a specified percentage, a general average loss cannot be added to a particular average loss to make up the specified percentage. (4) For the purpose of ascertaining whether the specified percentage has been reached, regard shall be had only to the actual loss suffered by the subject‑matter insured. Particular charges and the expenses of and incidental to ascertaining and proving the loss must be excluded. #### 83 Successive losses (1) Unless the policy otherwise provides, and subject to the provisions of this Act, the insurer is liable for successive losses, even though the total amount of such losses may exceed the sum insured. (2) Where, under the same policy, a partial loss, which has not been repaired or otherwise made good, is followed by a total loss, the assured can only recover in respect of the total loss: Provided that nothing in this section shall affect the liability of the insurer under the suing and labouring clause. #### 84 Suing and labouring clause (1) Where the policy contains a suing and labouring clause, the engagement thereby entered into is deemed to be supplementary to the contract of insurance, and the assured may recover from the insurer any expenses properly incurred pursuant to the clause, notwithstanding that the insurer may have paid for a total loss, or that the subject‑matter may have been warranted free from particular average, either wholly or under a certain percentage. (2) General average losses and contributions and salvage charges, as defined by this Act, are not recoverable under the suing and labouring clause. (3) Expenses incurred for the purpose of averting or diminishing any loss not covered by the policy are not recoverable under the suing and labouring clause. (4) It is the duty of the assured and his or her agents, in all cases, to take such measures as may be reasonable for the purpose of averting or minimizing a loss. ### Division 2—Rights of Insurer on Payment of Loss #### 85 Right of subrogation (1) Where the insurer pays for a total loss, either of the whole, or in the case of goods of any apportionable part, of the subject‑matter insured, he or she thereupon becomes entitled to take over the interest of the assured in whatever may remain of the subject‑matter so paid for, and he or she is thereby subrogated to all the rights and remedies of the assured in and in respect of that subject‑matter as from the time of the casualty causing the loss. (2) Subject to the foregoing provisions, where the insurer pays for a partial loss, he or she acquires no title to the subject‑matter insured, or such part of it as may remain, but he or she is thereupon subrogated to all rights and remedies of the assured in and in respect of the subject‑matter insured as from the time of the casualty causing the loss, in so far as the assured has been indemnified, according to this Act, by such payment for the loss. #### 86 Right of contribution (1) Where the assured is over‑insured by double insurance, each insurer is bound, as between himself or herself and the other insurers, to contribute rateably to the loss in proportion to the amount for which he or she is liable under his or her contract. (2) If any insurer pays more than his or her proportion of the loss, he or she is entitled to maintain an action for contribution against the other insurers, and is entitled to the like remedies as a surety who has paid more than his or her proportion of the debt. #### 87 Effect of under insurance Where the assured is insured for an amount less than the insurable value, or, in the case of a valued policy, for an amount less than the policy valuation, he or she is deemed to be his or her own insurer in respect of the uninsured balance. ## Part VII—Return of Premium #### 88 Enforcement of return Where the premium, or a proportionate part thereof, is, by this Act, declared to be returnable: (a) if already paid, it may be recovered by the assured from the insurer; and (b) if unpaid, it may be retained by the assured or his or her agent. #### 89 Return by agreement Where the policy contains a stipulation for the return of the premium, or a proportionate part thereof, on the happening of a certain event, and that event happens, the premium, or, as the case may be, the proportionate part thereof, is thereupon returnable to the assured. #### 90 Return for failure of consideration (1) Where the consideration for the payment of the premium totally fails, and there has been no fraud or illegality on the part of the assured or his or her agents, the premium is thereupon returnable to the assured. (2) Where the consideration for the payment of the premium is apportionable, and there is a total failure of any apportionable part of the consideration, a proportionate part of the premium is, under the like conditions, thereupon returnable to the assured. (3) In particular: (a) where the policy is void, or is avoided by the insurer as from the commencement of the risk, the premium is returnable, provided that there has been no fraud or illegality on the part of the assured; but if the risk is not apportionable, and has once attached, the premium is not returnable; (b) where the subject‑matter insured, or part thereof, has never been imperilled, the premium, or, as the case may be, a proportionate part thereof, is returnable: Provided that where the subject‑matter has been insured lost or not lost and has arrived in safety at the time when the contract is concluded, the premium is not returnable unless, at such time, the insurer knew of the safe arrival; (c) where the assured has no insurable interest throughout the currency of the risk, the premium is returnable, provided that this rule does not apply to a policy effected by way of gaming or wagering; (d) where the assured has a defeasible interest which is terminated during the currency of the risk, the premium is not returnable; (e) where the assured has over‑insured under an unvalued policy, a proportionate part of the premium is returnable; (f) subject to the foregoing provisions, where the assured has over‑insured by double insurance, a proportionate part of the several premiums is returnable: Provided that, if the policies are effected at different times, and any earlier policy has at any time borne the entire risk, or if a claim has been paid on the policy in respect of the full sum insured thereby, no premium is returnable in respect of that policy, and when the double insurance is effected knowingly by the assured no premium is returnable. ## Part VIII—Mutual Insurance #### 91 Modification of Act in case of mutual insurance (1) Where two or more persons mutually agree to insure each other against marine losses there is said to be a mutual insurance. (2) The provisions of this Act relating to the premium do not apply to mutual insurance, but a guarantee, or such other arrangement as may be agreed upon, may be substituted for the premium. (3) The provisions of this Act, in so far as they may be modified by the agreement of the parties, may in the case of mutual insurance be modified by the terms of the policies issued by the association, or by the rules and regulations of the association. (4) Subject to the exceptions mentioned in this section, the provisions of this Act apply to a mutual insurance. ## Part IX—Supplemental #### 92 Ratification by assured Where a contract of marine insurance is in good faith effected by one person on behalf of another, the person on whose behalf it is effected may ratify the contract even after he or she is aware of a loss. #### 93 Implied obligations varied by agreement or usage (1) Where any right, duty, or liability would arise under a contract of marine insurance by implication of law, it may be negatived or varied by express agreement, or by usage, if the usage be such as to bind both parties to the contract. (2) The provisions of this section extend to any right, duty, or liability declared by this Act which may be lawfully modified by agreement. #### 94 Reasonable time etc. a question of fact Where by this Act any reference is made to reasonable time, reasonable premium, or reasonable diligence, the question what is reasonable is a question of fact. #### 95 Reference to slip or cover note Where a policy in accordance with this Act has been issued nothing in this Act shall prevent reference being made in legal proceedings to the slip or covering note or other customary memorandum of a contract of marine insurance.