SECT. 67. Extent of liability of loss. In practice the normal English rule only applies in exceptional cases, because nearly every policy contains a foreign adjustment clause. Lloyd's clause runs :-" General average and salvage charges payable as per foreign official adjustment, if so made up, or per YorkAntwerp Rules [1890] if in accordance with the contract of affreightment." The York-Antwerp Rules, though generally accepted, only cover a portion of the field. It seems a moot point whether salvage charges, properly so called, can ever be recovered as general average (McArthur, Ed. 2, p. 171, n.). Mr. Carver contends that they cannot.1 Concerning general average as between ship, freight, and cargo, see Carver's Carriage by Sea, Ed. 3 (1900), §§ 361–445. Measure of Indemnity. § 68. Where there is a loss recoverable under the insurer for policy, the insurer, or each insurer if there be more than · one, is liable for such proportion of the loss as the amount of his 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. The liability of the insurer for expenses properly incurred pursuant to the suing and labouring clause must be determined on the same principle. the hypo NOTE. The adjustment of marine losses proceeds upon thesis that the subject-matter insured is fully covered by insurance.2 Suppose a ship valued at £10,000 is insured for £1000 only. The shipowner is said to be "his own insurer " for £9000, and any loss which occurs must be adjusted on this basis. The following cases may be put in illustration of this principle :— 1. A cargo valued at £10,000 is insured for £1000 by ten underwriters, who each subscribe for £100. It is damaged by sea perils to the extent of £1000. Each underwriter is liable for £10 only. 1 See Carver's Carriage by Sea, Ed. 3, §§ 394-396, distinguishing salvors, properly so called, who intervene voluntarily, from salvors employed by the ship. * Fire insurance losses are adjusted on a different basis. See post, p. 143. 2. A ship valued at £5000 is insured for £1000. The ship is SECT. 68. stranded, and the owner spends £1000 in trying to get her off, but eventually she is totally lost. The insurer must pay £1000 on the policy, and £200 (i.e. one-fifth) under the suing and labouring clause. It is immaterial whether the real value of the ship be £4500 or £5500.1 As to the suing and labouring clause, which is a distinct engagement in the policy, see § 79. § 69. Where there is a total loss of the subject-matter Total loss. insured : (1.) If the policy be a valued policy, the measure of indemnity is the sum fixed by the policy.2 (2.) If the policy be an unvalued policy, the measure of indemnity (subject to the limit of the sum insured and any express provision in the policy), is the insurable value of the subject-matter insured.3 of ship. § 70. Where a ship is damaged, but is not totally Partial loss lost, the measure of indemnity, subject to any express provision in the policy, is as follows: : (1.) Where the ship has been repaired, the assured is entitled to the reasonable cost of the repairs, less the customary deductions mentioned in the Second Schedule to this Digest, but not exceeding the sum insured in respect of any one casualty.* 1 See McArthur, Ed. 2, p. 269; and § 79, post. 2 Arnould, Ed. 6, p. 1157; Irving v. Manning (1847), 1 H. of L. Cas. at pp. 305, 307; Sailing Ship Blairmore v. Macredie (1898), A. C. at p. 610. 3 Arnould, Ed. 6, p. 1156; Irving v. Manning (1847), 1 H. of L. Cas. at pp. 305, 307; and as to "insurable value," see § 16 and notes. ♦ McArthur, Ed. 2, pp. 212, 219; Aitchison v. Lohre (1879), 4 App. Cas. at p. 762; Pitman v. Universal Mar. Ins. Co. (1882), 9 Q. B. D. at p. 208. For Schedule, see post, p. 131. SECT. 70. (2.) 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 arising from the unrepaired damage, provided that the aggregate amount shall not exceed the cost of repairing the whole damage, computed as above.1 (3.) Where the ship has not been repaired 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.2 (4.) Where the ship has not been repaired, and is sold in her damaged state during the risk, the assured is entitled to the reasonable cost of repairing such damage, computed as above, but not exceeding the actual depreciation in the value of the ship as ascertained by the sale.8 Illustrations. The ship is injured in a collision, 1. Policy on hull and machinery. and has to put into dock for repairs. the shipowner incurs expenses in landing it. These expenses cannot be recovered under the policy on ship.1 2. Policy on ship. In consequence of damage the ship is put into dry dock for repairs. The owners take the opportunity to have her surveyed for Lloyd's classification, but this does not increase the 1 McArthur, Ed. 2, p. 220; cf. Stewart v. Steele (1852), 5 Scott N. R. 927, at p. 948. 2 Ibid. Ibid.; and Pitman v. Universal Mar. Ins. Co. (1882), 9 Q. B. D. 192, at pp. 218, 219, C. A. Field Steamship Co. v. Burr (1899), 1 Q. B. 579, C. A. time in dock. The insurer must pay the whole expenses of docking SECT. 70. the ship.1 NOTE.-The Second Schedule, post, p. 131, contains the details of adjustment. In the case of wooden ships, except on first voyage, the custom is to make an arbitrary deduction of "one-third new for old" from the cost of the repairs. But this rule is inapplicable to iron ships, and the practice is to provide for them by special clauses. Lloyd's clause for steamers and iron ships runs, "No thirds to be deducted except as regards hemp rigging and ropes, sails, and wooden deck." 3 Subsect. (4) reproduces the rule laid down in Pitman v. Universal Mar. Ins. Co., cited below. Lord Esher dissented from the judgment, thinking the principle it laid down a dangerous innovation, and that the estimated cost of repair, less the usual deductions, should be the sole measure of indemnity. The decision is unsatisfactory, because the other judges on appeal expressly refrained from deciding what was to be taken as the basis of depreciation. The sale price is one factor in the comparison, but what is the other factor? Is it the value of the ship at the commencement of the risk, or at the time of the casualty, or what other value? As to total loss following a partial loss, see § 78, post, p. 99. of freight. § 71. Where there is a partial loss of freight, the Partial loss measure of indemnity (subject to the limit of the sum insured, and any express provision in the policy), 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.1 1 Ruabon Steamship Co. v. London Assurance (1900), A. C. 6 H. L. ; distinguishing the Vancouver Case (1886), 11 App. Cas. 573. 2 See McArthur, Ed. 2, p. 213; Pitman v. Universal Mar. Ins. Co. (1882), 9 Q. B. D. at p. 215; cf. Henderson v. Shankland (1896), 1 Q. B. at p. 530, C. A. 3 See McArthur, Ed. 2, pp. 313, 403. ✦ Ibid., p. 235; Lowndes, Ed. 2, p. 195; Denoon v. Home and Col. Ins. Co. (1872), L. R. 7 C. P. at p. 351; The Main (1894), P. 320. As to the facts which constitute a partial, as distinguished from a total, loss of freight, see Rankin v. Potter (1873), L. R. 6 H. L. at pp. 98–100, per Brett, J. SECT. 72. § 72. Where there is a partial loss of goods, merchanPartial loss dise, or other movables, the measure of indemnity, subject to the limits of the sum insured and any express provision in the policy, is as follows: of goods, merchan dise, etc. (1.) 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 value of the part lost bears to the insurable value of the whole, ascertained as in the case of an unvalued policy.1 (2.) 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.2 (3.) Where the whole or any part of the goods or merchandise insured has been delivered damaged at its destination, the measure of indemnity is the ratio of loss, ascertained by comparing the gross sound and damaged values, reduced to the same cash basis, at the time and place of arrival, applied to the sum fixed by the policy, in the case of a valued policy, or to the insurable value, in the case or an unvalued policy.3 (4.) "Gross value" means the price which a wholesale buyer would give with freight, landing charges, 1 McArthur, Ed. 2, p. 246; Lewis v. Rucker (1761), 2 Burr. 1167. 2 Ibid.; cf. Tobin v. Harford (1863), 32 L. J. C. P. 134, 136. McArthur, Ed. 2, p. 247; Johnson v. Sheddon (1802), 2 East, 580 (the "brimstone case"). As to estimating the value of jettisoned goods, cf. Fletcher v. Alexander (1868), L. R. 3 C. P. 375 (general average case). |