Principle on which Marine Insurance is founded, and early, nor borne in mind too attentively, that the underwriter pays no loss except with reference to the sum on which he is risks estimated. paid premium; the whole sum, if the loss be total; some aliquot part of the sum, if the loss be partial. Marine Insurance is a contract of indemnity. Nature and extent of the indemnity which it affords. In France. SECT. IV. Nature of the Indemnity afforded by Marine § 8. Such being the principle upon which the whole business of Marine Insurance is founded, let us next consider the nature and objects of the contract itself. The very essence of the contract of Marine Insurance is that it is a contract of INDEMNITY (e); its sole and exclusive object is to procure for the assured indemnity, in the strictest sense. of that word, for any losses he may sustain through the agency of those sea-risks, against the effect of which the underwriter by the terms of his policy stands pledged to protect him. To prevent the assured from suffering loss by means of any of the perils insured against, is the single aim of a contract of Marine Insurance, and its whole spirit would be violated, if he could make the occurrence of any such casualties a means of gain, for this would be to give him an interest in procuring sea-losses, which would be opposed to every principle of commercial policy. (f) § 9. Indemnity then, being the sole object of the contract of Marine Insurance, it becomes important to inquire into the nature and extent of the indemnity it professes to afford. The foreign jurists, and especially the French, have rigorously confined the contract to an indemnity against such losses only as may be caused by the perils of the sea to some tangible property of which the assured is actually in possession (e) It is not necessarily a perfect contract of indemnity; for the parties may, by agreement, estimate at a fixed sum the amount which they are to receive in case of loss, on the subject insured, by way of liquidated damages, as, indeed, they may in other contracts to indemnify. Opinion of the judges in Irving v. Manning, in Dom. Proc. 26th July, 1847. (f) Assecuratus non quærit lucrum sed agit ne in damno sit. Straccha de Assecurationibus, gl. 20. No. 4. Marine Insu rance. In this country United States. at the time of the loss: they will by no means allow it to Nature of the indemnity extend to an indemnity against the loss of that gain or profit afforded by which the same perils have prevented him from realising. (g) In this country however, and in the United States, a more liberal policy has prevailed, and the contract of Marine In- and in the surance is considered applicable to protect men, not only against such events as may occasion the deprivation of that which they may actually possess, but against those also which would intercept from them the advantage or profit which, but for such events, they would acquire in the ordinary and probable course of things. (h) Hence in this country, as we shall see more at large hereafter, the loss arising from the interception by the perils insured against, of future freight and expected profit, is quite as legitimate an object of that indemnity which Marine Insurance can afford, as the damage actually inflicted by the same perils upon ships or merchandize. assured receives nity for his loss § 10. The amount of indemnity actually received by the Whether the assured from the underwriters in case of loss, is the next consideration: and this it is plain, upon the principle adverted to in the last section, must depend entirely upon the amount which the several underwriters have agreed to insure, and which from the different sums standing against their names, at the foot of the policy, is technically called the amount of their subscriptions. If the aggregate of all the sums so insured, or (in case of the insurance being effected with a company, &c.), if the whole sum insured be equal to (in technical language be sufficient to cover) the whole value of the subject insured, then the assured in case of loss will receive a full indemnity. If the sum insured, or the aggregate of such sums, fall short of (9) On ne peut faire assurer que ce qu'on court risque de perdre et nullement les gains qu'on manque de faire. Pothier, Traité d'Assurance, No. 31 ed. 1809, par Estrangin, p. 38. (h) Per Lawrence J. in Lucena r. Crawfurd, 2 New Rep. p. 361. the sum he has interest he has at risk, Nature of the indemnity afforded by Marine Insu rance. Hence the necessity of a correct valuation, for the purposes of insu rance. General principle of valuation adopted in the practice of Marine Insurance. The nature of the indemnity actually af forded in prac tice by Marine Insurance is regulated by this mode of estimating the value of the property insured. this, it is plain that the assured will receive less than a full indemnity. It is obviously therefore of prime importance to the merchant or ship-owner, who desires to obtain a full protection for his property, to take care that he insures that property at its full value. § 11. It would be out of place here to enter at any length into the subject of the valuation of ship and goods, for the purposes of insurance (i); it will be sufficient to state that the general practice is, to value both the ship and goods at the sum which they are severally worth to their respective owners at the outset of the adventure, adding thereto the premium, and all the costs of effecting the insurance. (j) Now supposing the ship-owner or the merchant to have insured their ship or goods with the underwriter on the basis of this valuation, it is obvious that in case of a total loss they would receive all the indemnity they were entitled to (that is, all they had paid premiums for), if, after the loss, the underwriter paid them a sum equivalent to the value of the ship and goods at the outset of the adventure, plus the premium and costs of insurance. This accordingly, supposing them to have insured up to the full value of the ship and goods at the outset, is exactly the amount of indemnity they would actually receive in this country, in the case supposed. § 12. From this mode of insuring ship and goods, it results as a general rule that the indemnity obtained by an insurance on these articles consists in replacing their respective owners in the same situation in which they stood at the outset of the adventure, without any regard being paid to the diminished value of the ship by wear and tear on the one hand, or to the increased value of the goods by the profit they would have realised on the other. (k) Without entering in this place into any discussions as to (i) See post, Part I. Chap. XI. (j) Stevens on Average, 5th edit. p. 177. 199. (k) Stevens on Average, 5th edit. p. 177, 178. the adequacy of the indemnity thus afforded, or its consistency with the true principles of the law of insurance, it will be sufficient to lay it down as an elementary principle of that law, as generally understood and practised in this country; that (except of course in the case of insurances on freight, profits or other contingent interests of a similar nature), it is not intended by the contract of Marine Insurance to put the assured in, the same situation, in case of loss, as he would have been in, had the adventure terminated successfully, but only to replace him, as nearly as may be, in the position he occupied at the outset of his enterprise.(1) Nature of the indemnity afforded by Marine Insurance. ciple of indemnity in Marine Hence the prin Insurance is not to put the assured, in case of loss, in the same situation have been had terminated suc as he would the adventure cessfully, but only to replace him, as far as possible, in the position he oc SECT. V. Interest exposed to risk indispensable to every Con- cupied at the tract of Marine Insurance. of § 13. An indispensable requisite of every contract Marine Insurance, properly so called, is that something in which the assured has an actual interest should be exposed to the risk of loss from the perils insured against, upon the voyage or during the period over which the indemnity is by the terms of the contract made to extend. (m) This is the most fundamental principle in the whole law of Marine Insurance. Principale fundamentum assecurationis est risicum seu interesse assecuratorum; sine quo non potest subsistere assecuratio. (n) "In order to make the contract of insurance perfect," says Emerigon, "there must not only be a something which is the subject of insurance, but this something must be exposed to the risks of the sea, at the moment when the loss occurs, against which the insurance is intended to be an indemnity." (0) The contract of Marine Insurance, in short, is nothing but a contract of indemnity against the risk of loss by sea perils, and the premium is nothing but the price paid for this in (1) Stevens on Average, 5th edit. p. 96. p. 42. Phillips on Insurance, vol. ii. (m) Emerigon, chap. i. sect. 1. vol. i. p. 6. ed. 1827. Benecké, System des Assecuranz, chap. i. vol. i. p. 23. ed. (n) Casaregis, disc. 4. No. 1. cited (0) Emerigon, vol. i. p. 6. ed. 1827. Interest exposed to risk indispensable to every con demnity; it is obvious therefore that if the assured is not really interested in something which he runs the risk of tract of Marine losing by the perils of the sea, there is no consideration for the sum he has paid: and as the foreign jurists express it, no matter on which the contract can work, for its very constituent element is the possibility of loss from marine casualties. (p) Insurance. Distinction between contracts of Marine Insurance, and sea-wagers in the form of policies. § 14. Two things, in fact, are mainly essential to every contract of Marine Insurance. 1. Some subject, or interest insured. 2. Exposure of that interest to risk of loss or detriment by sea-perils. It is the necessity for these requisites which entirely distinguishes Contracts of Marine Insurance, properly so called, from mere Wagers upon the issue of maritime adventures. Such maritime wagers, although framed externally as policies of sea-assurance, and therefore called wager policies, have, as we shall see more at large hereafter, been prohibited in this country by a solemn act of the legislature, and in most other maritime states are either expressly forbidden or practically disused: and this on the ground that it is plainly opposed to the true interests of a mercantile state to enable those, who have no real stake in the safety of a maritime adventure, to give themselves (by means of such a contract) a great interest in its loss or destruction. Mode in which the business of Marine Assurance is practically carried on. SECT. VI. Sketch of the Mode in which the Business of Marine § 15. In order to give the student a clearer notion of what is to follow, a short sketch of the general mode of transacting insurance business is here introduced. It is very rarely, as we shall see more fully hereafter, that (p) Si non adest risicum assecuratio non valet, nam non adest materia in quâ forma potest fundari. Roccus, No. 88. En un mot, la perte ou le dom mage considerés dans l'incertitude des évènemens sont la matière de ce contrat. Emerigon, chap. i. sect. 1. vol. i. p. 6. and 14. ed. 1827. |