individual shipments applicable to the floating policy are not known until after the risk has terminated by arrival or by the loss of the vessel. In either case were the basis of valuation not determined endless disputes would arise as to the amount of loss suffered by the assured, or as to the amount of premium to which the underwriter is entitled, since the premium is charged at predetermined rates applied to the insured amounts. Hull Values. In the case of hull insurance, the valuation is always expressed in dollars. Owing to the large values involved in the modern cargo or passenger steamer, it is usual to divide the valuation into parts, one applying to the hull, tackle and furniture of the steamer, the other to its machinery. In the case of expensively fitted passenger steamers or of refrigerated vessels, a further separation may be made showing the value of the cabin outfit or the refrigerating plant. No problem is more difficult than that of determining a fair insured value for a vessel nor is any problem more important from the viewpoint of sound and conservative underwriting. The purpose in separating the value of a steamer into parts is to permit of claims for smaller losses being made, the percentage of loss necessary to make a claim being applied to each separate valuation or to the whole value, whichever method is most advantageous to the assured. CHAPTER 8 THE POLICY (Continued). THE "PERILS” CLAUSE Perils Insured Against.-The quaintest portion of the marine insurance policy and that part of it which most clearly shows that it is a document that originated many years ago, is the paragraph dealing with the perils insured. These hazards are not listed in any logical order, marine perils and war perils following each other indiscriminately, indicating that this portion of the policy at least was the result of evolution, new perils being added as commerce developed and as new difficulties were encountered by mariners in extending the scope of their commercial activities. Words are used which have become obsolete and leave in doubt the precise form of peril which the early underwriter and merchant had in mind. General words follow the specific enumeration of hazards making obscure the true intent of the policy. Read without reference to the wealth of legal lore referring to this particular part of the policy, the document is vague, misleading and perhaps unintelligible. But practically every word in the paragraph has been weighed in the judicial balance and its own meaning and its meaning in relation to the context has been determined. Therefore this particular wording has continued through the centuries, with some slight modifications appearing in the various forms of the individual companies, but in general the same wording being followed in all. No company cares to adopt an entirely new wording, lest the established practices and decisions of the preceding centuries be overthrown and a new contract, subject to all the dangers of new legal interpretations, be found to leave the meaning of the policy in doubt. A Formidable List of Calamities. The enumeration of the perils in the printed form under consideration is worded in the following manner, i.e., "Touching the adventures and perils which the said Insurance Company is contented to bear, and takes upon itself in this voyage, they are of the seas, men-of-war, fires, enemies, pirates, rovers, thieves, jettisons, letters of mart and countermart, reprisals, takings at sea, arrests, restraints and detainments of all kings, princes, or people, of what nation, condition or quality soever, barratry of the master and mariners, and all other perils, losses and misfortunes that have or shall come to the hurt, detriment or damage of the said goods and merchandises, or any part thereof." Truly this is a formidable list of calamities and seems to afford but little hope of escape for the underwriter. The courts, however, have been reasonably kind to the underwriters in their interpretation of these perils and have in most cases tempered justice with mercy. Doctrine of Proximate Cause. It will be noted that the policy applies only on the voyage insured and covers only losses occasioned by the perils stipulated, provided these hazards or any one of them is the proximate cause of the loss. The doctrine of proximate cause is in no way peculiar to the subject of marine insurance, since it is a familiar principle of all law concerning the liability of one person to another for injury suffered. This principle of fixing liability by considering the direct, primary and immediate cause of the injury suffered and not the remote and indirect cause, is of the greatest importance in determining liability under marine insurance policies. Phillips in Section 1132 of his admirable work on the law of marine insurance sets forth the determination of the proximate cause in these words: "In case of the concurrence of different causes, to one of which it is necessary to attribute the loss, it is to be attributed to the efficient predominating peril, whether it is or is not in activity at the consummation of the disaster." That is, if at the time of disaster there are in operation two perils, one of which is covered under the policy and the other is not, as in the case of a marine peril operating at the same time as a war peril, it must be determined which of the two perils is the all efficient and predominating one which caused the resultant loss. The fact that the hazard which was the proximate cause was not in activity at the moment of destruction would not preclude that peril from being the actual and efficient cause of disaster. To illustrate, a steamer insured under a policy covering marine risks only, might be torpedoed, but nevertheless still float and have a reasonable chance of making port. Because she is partially out of control of the master, however, on account of making water and having a heavy list, in endeavoring to make port the steamer might miss the channel, run ashore and become a total loss. The immediate cause of the total destruction of the vessel would undoubtedly be the stranding, a marine peril, but the proximate cause would be the torpedoing, a war peril, and the loss should not fall on the marine underwriter. Losses Which are not Covered by the Policy.-It must be borne in mind that while an underwriter is liable for losses caused by perils of the sea, the meaning of which will be explained presently, he is not necessarily liable for perils on the sea. The underwriter is not liable for the ordinary and inevitable action of the forces of nature causing ordinary wear and tear to the vessel. He is not liable for the natural decay of the vessel due to the passage of time. He is not liable for loss arising from the subject itself because of its inherent qualities, nor is he liable for a fire arising from the improper preparation of a raw commodity, as for instance the occurrence of spontaneous combustion in a cargo of hemp which was shipped in an improperly cured condition. But it seems he may not deny liability for consequent damage to property insured by him belonging to another which is part of the same venture. Neither is the underwriter responsible for loss caused by the ordinary leakage of liquids. He is liable, however, for events which, through no fault of the assured, enhance the risk, as for instance unavoidable delay in the commencement or prosecution of the voyage, by which the time at risk under the policy is increased beyond that in contemplation by the underwriter at the time of accepting the risk. Therefore, if a policy in time of peace covers the risks of war at a determined rate for a named period, and war suddenly breaks out, the underwriter is not relieved of his responsibility, notwithstanding the fact that the compensation that he is receiving, through the occurrence of an unforeseen event, is inadequate. Losses Due to Fraud or Misconduct.-An underwriter, obviously, is not responsible for losses caused by perils insured against, which are directly incurred by fraud or misconduct, but it must be shown that such fraud or misconduct is the proximate cause of such loss. Negligence in order to void the policy must amount to gross negligence or to willful misconduct. Errors of judgment on the part of the captain of a vessel will not forfeit the insurance, but willful misconduct done in bad faith and illegally, or gross carelessness of the captain, showing culpability, will not be covered by the policy unless barratry, which term will later be explained, also is covered. In connection with the preceding remarks it should be noted that Congress in 1893, in order to promote the overseas commerce of the United States, passed what is known as the "Harter Act" (see Appendix, p. 417). This statute relieves the owner of a ship from the consequences of careless or negligent acts on the part of the master of the vessel, or from liability for losses caused by inherent defects or weakness in the vessel itself, provided the owner or his manager has taken all precautions to provide a seaworthy vessel, which has been adequately equipped and manned by a competent master and crew. Similar statutes are found in the laws of other maritime nations. - Perils of the Sea. In the enumeration of the hazards against which protection is afforded by the policy, perils of the sea are first mentioned. These are the general words used to describe all losses which are the result of the unusual action of the forces of nature operating in and about navigable waters. A careful distinction must be made, however, between "perils of the seas" and "perils on the seas." The policy does not, under the form of wording used, cover all perils which may overtake the venture on the seas, but only those which are the direct result of actual perils of the sea. Included in these general words are losses resulting from the unusual action of the wind, not the ordinary wear and tear caused by the ever-moving atmosphere, but losses resulting from the tempestuous action of this force. It is not necessary that the resultant loss be an immediate effect of wind as the loss of sails or the snapping of a mast. It may be a con |