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It was my intention, on first taking this work in hand, to prepare a third edition of my little book on “The Policy of Marine Insurance ;” but, on proceeding to carry that intention into effect, I found that the plan upon which I had previously proceeded would not admit of the enlarged and more systematic treatment of the subject which it was my desire to adopt I was, therefore, led to abandon my original intention and commence anew, under a more comprehensive plan and a fresh title. At the same time, so far as regards the interpretation of the express terms of the contract, I have thought it advisable to adhere to the lines laid down in the previous work, no better plan having suggested itself than to take, as the basis for explanation, the common form of Lloyd's policy, supplemented by the additional clauses in general use. In fact, the employment of that method will constitute the distinctive feature of this Volume, as compared with other treatises upon the subject, among which the great work of Arnould (edited by Maclachlan) justly stands pre-eminent as a commentary in general upon the law of marine insurance.
My aim in the following pages will be to explain the contract of marine insurance, with especial reference to the mode in which effect is given to its provisions in the making of insurances and the adjustment of losses. In pursuance of this object, it will be necessary to give an outline of the law of general average, as well as to state and explain the law of marine insurance. I cannot attempt, within the compass of one volume of moderate dimensions, to enter upon a detailed exposition of those extensive branches of our mercantile jurisprudence; but I shall endeavour to draw therefrom the materials necessary to furnish the mercantile reader with a guide to the right understanding of that department of the subject to which attention is directed.
In entering upon the consideration of the contract of marine insurance, it is impossible to avoid giving a passing glance at several movements in progress at the present time which have an important bearing upon the relations between the assured and the underwriter ; and, to those outlying matters of interest, some further observations of a prefatory nature may at this stage be appropriately given. Before proceeding to touch upon those topics, I must, however, express my indebtedness to several friends in London and Liverpool who have kindly furnished me with information relative to the routine of business which has been of much service in the preparation of this work.
At the outset of an inquiry into the meaning of the terms of the contract of marine insurance, an impediment arises in respect of the diversity which occurs in the phraseology of the. instrument by means of which insurance is effected. That impediment, though serious, is not so insuperable as may at first sight appear. It is true that, almost without exception, every Marine Insurance Company issues its own form of policy; but, it is rare to meet with any such policy which is not in substantial agreement with the common form of Lloyd's policy. Irrespective of any special clauses inserted in them, policies are considered to afford the same measure of protection, whether effected with companies or private underwriters. The policies issued by Mutual Insurance Associations, being framed upon a different principle, exhibit greater variation, though all contracts of marine insurance have of necessity many features in common. With respect to the additional clauses which are used to supplement the ordinary form of policy, greater diversity
has been manifested; but some approach to uniformity in this respect has recently been made by an agreement on the part of the principal underwriting associations of the United Kingdom to use a series of clauses in a definite form, adopted by a representative meeting of underwriters held at Lloyd's, particulars of which will be found in Appendix III. Other clauses which were recommended, but not adopted, on the same occasion, have not met with the same general acceptance.
Another subject which is closely related to the contract of marine insurance is the fresh legislation which was recently proposed for the purpose of amending the law. Before taking a brief survey of these proposals, I would point out that the system of the law of marine insurance has been formed at different times and by different persons, for the most part out of the maxims, customs, and observances which had become current among mercantile men before the contract came within the cognizance of the Courts. It was inevitable that a system constituted in this desultory way should be deficient in the symmetry which it might have been expected to possess, if it had been formed, like the Insurance Codes of some foreign countries, as a complete body of law. Accordingly, the law of marine insurance, in growing up as a branch of the Common Law, has acquired some of the irregularities of structure natural to that mode of formation. Steps have from time to time been taken by the Legislature to correct these anomalies and regulate the business of marine insurance, in so far as the unwritten law failed to provide a sufficient rule. The development of the system of marine insurance has, however, been modified only to a slight extent by legislation.
The latest effort in this direction was made by means of the Merchant Shipping Bill of 1884, which was submitted to Parliament at the instance of the Board of Trade with the object of promoting the security of life and property at sea. In furtherance of that object, a scheme for the revision of the
law of marine insurance was introduced into the Bill, the leading principles of which were stated to be : First,“ to prevent a person by means of the contract of insurance obtaining in any case more than an indemnity for any loss he may actually suffer by the loss of or damage to the thing insured ;" and, secondly, “to prevent a shipowner recovering anything under a marine insurance if his ship is unseaworthy at starting, or if the loss is due to unseaworthiness that might have been prevented.” It was further stated in the preamble, that it was not the intention of the promoters of the measure to prevent a shipowner or any other person embarking in a marine adventure from insuring everything that he might expose to risk, to such an extent that, in case of loss, he might be placed in the same condition as if the adventure had been successfully carried out.
Had the Bill been drafted so as to give effect to these principles, no reasonable objection could have been made to its general scope and intention, excepting that there was a seeming omission to provide for the insurance of liabilities, such as those resulting from collision, which could not be said to arise from “ the loss of or damage to the thing insured.” When, however, its provisions were made public, it appeared that the measure was drawn so as not only to prohibit over-insurance, but also to prevent the obtaining of an indemnity by means of insurance. In several other important particulars it was evident that the clauses of the Bill were not so drafted as to give effect to the principles set forth in the preamble. It was also generally objected to the Bill that the regulations for the prevention of over-insurance were of too harassing and restrictive a character, and that the measure, had it become law, would have partially deprived the shipping interest of the benefits derivable from legitimate insurance. For these reasons, the proposals encountered the most strenuous opposition on the part of shipowners, underwriters, and, indeed, of all sections of the mercantile community. After the introduction of the Bill,