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One underwriter fearing a loss thus transfers part of his risk to another, who expects the early and safe arrival of the vessel. If uncertainty concerning the vessel continues, this second underwriter, by offering a still higher premium, may transfer part of his risk to another, who again has good hopes, and so on until, if it is finally learned that the vessel and cargo are lost, the risk has been so widely diffused that the loss incurred by any one individual is comparatively small. Lastly, it is interesting to note that collectively the underwriters at Lloyd's have no interest in examining risks, because they have no interest in diminishing loss. On the contrary, strange as it may seem, they express a preference for a high rate of loss to a low one. Individually, they all desire and expect to avoid the payment of claims, but collectively they all wish and expect to profit by high rates. Hence it is that they prefer the increase in premium which accompanies an increase in losses.

S. G. £

COPY OF LLOYD'S FORM OF POLICY

BE IT KNOWN THAT

as well in

own name as for and in the name of all and every other person or persons to whom the same doth, may, or shall appertain, in part or in all, doth make assurance and cause and them and every of them to be insured, lost or not lost, at and from

upon any kinds of goods and merchandises and also upon the body, tackle, apparel, ordnance, munition, artillery, boat, and other furniture, of and in the good ship or vessel called the whereof

master, under God for this present voyage,

is

or

whosoever else shall go for Master in the said ship or by whatsoever other name or names the same ship, or the Master thereof, is or shall be named or called, beginning the adventure upon the said goods and merchandises from the loading thereof aboard the said ship, upon the said ship, her tackle, apparel, etc.,

and shall so continue and endure, during her abode there, upon the said ship, etc.; and further until the said ship, with all her ordnance, tackle, apparel, etc., and goods and merchandises whatso

ever, shall be arrived at port of discharge as above and upon the said ship, etc., until she hath moored at anchor twenty four hours in good safety, and upon the goods and merchandises until the same be there discharged and safely landed; and it shall be lawful for the said ship, etc., in this voyage to proceed and sail to, and touch and stay at any port or place whatsoever,

without prejudice to this Insurance. The said ship, her tackle, apparel, etc., goods and merchandise, etc., for so much as concerns the assured, by agreement between the assured and assurers in this Policy, are and shall be valued at

Touching the adventures and perils which we, the Assurers, are contented to bear and do take upon us in this voyage, they are of the seas, men-of-war, fire, enemies, pirates, rovers, thieves, jettisons, letters of mart and countermart, surprisal, taking at sea, arrests, restraints, and detainments of all Kings, Princes, and People, of what nation, condition or quality soever: barratry of the Master and Mariners, and of all perils, losses, and misfortunes, that have or shall come to the hurt, detriment, or damage of the said goods and merchandises and ship, tackle, apparel, etc., or any part thereof; and in case of any loss or misfortune, it shall be lawful to the Assured, their factors, servants, and assigns, to sue, labor, and travel for, in and about the defence, safeguard, and recovery of the said goods and merchandises and ship, etc., or any part thereof, without prejudice to this Insurance; to the charges whereof we, the Assurers, will contribute each one according to the rate and quantity of his sum herein assured. And it is agreed by us, the Insurers, that this Writing or Policy of Assurance shall be of as much force and effect as the surest Writing or Policy of Assurance heretofore made in Lombard Street, or in the Royal Exchange, or elsewhere in London. And so we, the Assurers, are contented, and do hereby promise and bind ourselves, each one for his own part, our heirs, executors, and goods, to the Assured, their executors, administrators, and assigns, for the true performance of the premises, confessing ourselves paid the consideration due unto us for this Assurance by the Assured .at and after the rate of .... per cent.

In Witness whereof we, the Assurers, have subscribed our names and sums assured in London, 191...

N. B. Corn, fish, salt, fruit, flour, and seed are warranted free from Average, unless general, or the ship be stranded; sugar, tobacco, hemp, flax, hides, and skins are warranted free from

Average under Five Pounds per cent; and all other goods, also the ship and freight, are warranted free from Average under Three Pounds per cent, unless general, or the ship be stranded.

(Here may follow various attachments to the policy.)

[At top on left.]

This policy is issued in the form printed and supplied by the Government previous to 1st August, 1887 (with ... additions

printed in italics).

......

For signature by underwriting members of Lloyd's only. (34 & 35 Vic. Anchor. Lloyd's act, 1871.)

Any person not an underwriting member of Lloyd's subscribing this policy, or any person uttering the same if so subscribed, will be liable to be proceeded against under sec. 31 of Lloyd's act.

[Space for signatures of underwriters.]

£700 [11 names; "one twelfth" opposite 10 names, "two twelfths" opposite 1 name], of seven hdd. pds. per (name). £50 [1 name], fifty pds.

£600 [21 names], each one twenty first part of six hundred pounds per (name).

£500 [21 names], each one twenty-first part of five hdd. pds. per (name).

£500 [12 names], each one twelfth part, five hdd. pds. per (name).

[blocks in formation]

£100 [5 names], each one fifth of one hdd. pds. per (name). £150 [9 names], each one ninth part of one hdd. & fifty pds. per (name).

£150 [5 names; "two sevenths" opposite 2 names, "one seventh" opposite 3 names], of one hdd. & fifty pds. per (name). £50 [1 name]

£50 [1 name]

}fifty pds., each per (name).

£20 [1 name], twenty pds. per (name).

£500, underwriting members of Lloyd's [20 names], each one twentieth part, five hundred pds. per (name).

CHAPTER XXIV

TYPES OF POLICY CONTRACTS IN MARINE

INSURANCE

A CONTRACT of marine insurance has been defined as "a contract of indemnity, in which the insurer, in consideration of the payment of a certain premium, agrees to make good to the assured all losses, not exceeding a certain amount, that may happen to the subject insured, from the risks enumerated or implied in the policy, during a certain voyage or period of time." 1 It is essential in a marine policy that the parties to the contract shall have undertaken the transaction in good faith. This is true of all contracts, but especially so of a contract of marine insurance, where the risks assumed are not only very numerous, but also very complex. Moreover, all material facts must be stated to the underwriter, and fraud of any kind will nullify the policy. The misrepresentation or concealment of material facts with a view, for example, to deceive or influence an underwriter into accepting a risk or in fixing the premium will deprive the offending party not only of any premiums paid, but of all rights accruing from the policy.

Equally essential to the validity of a marine-insurance policy is the requirement that the insured shall actually possess an insurable interest in the subject insured. Such an interest, however, need not necessarily represent ownership. As Mr. Justice Lawrence defined it: "To be interested in the preservation of a thing is to be so circumstanced with respect

'John Duer, "Law and Practice of Marine Insurance,” Vol. I,

p. 58.

to it as to have benefit from its existence, prejudice from its destruction. The property of the thing and the interest derived may be very different. Of the first, the price is generally the measure; but, by interest in a thing, every benefit and advantage arising out of or depending on such thing may be considered as being comprehended." 1 This definition indicates that any one pecuniarily interested in the safe arrival of a vessel or cargo has an insurable interest in the same. A mortgagee has an interest in a vessel to the extent of his mortgage, which he may insure. A trustee or bailee possesses an insurable interest in property entrusted to him, as also does a consignee of goods who has advanced money against their value. Advances made for repairs to a ship at a port of refuge, which are to be repaid at the close of the voyage out of the ship's cargo and freight, give rise to an insurable interest. Those concerned in any profits to be derived from a venture have an insurable interest in them; and among the numerous other ways, besides ownership, in which an insurable interest may exist in a given subject, it is almost needless to state, is the interest which the marine underwriter himself possesses in the risks he has underwritten, and which he very frequently finds it desirable to reinsure.

Summarizing, then, the essential features of a marineinsurance policy (following Mr. Gow's outline), it may be described as:

"(1) A contract of indemnity;

(2) Made in good faith (in uberrima fide);

(3) Referring to a defined proportion;

(4) Of a genuine interest in a named object;

(5) Being against contingencies definitely expressed, to which that object is actually exposed;

(6) And in return for a fixed and determined consideration." 2

1 William Gow, "Marine Insurance," Second Edition, p. 77. 2 Ibid., p. 11.

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