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It should always be remembered that the liability for general average contributions and the right to claim it are matters which are entirely independent of marine insurance. If no insurance exists on any of the property involved, the respective owners must bear the contributions themselves. If, however, the property sacrificed is insured, then the underwriter becomes liable for the insured value, and by paying the same, comes into possession of the right to receive the sums allowed in general average after deducting the contribution which applies to the interest he now represents. Moreover, if the contributing interests are insured, the underwriter is also liable for general average damage. But in determining the extent of his liability for such contributions, the insured value of the property must be taken into account. If the insured value is equal to the value of the contributing interest, the underwriter pays all the general average contributions; but if it is less, he only pays the contribution in the proportion which the insured value bears to the contributory value.

3. Particular Average. This term comprises all partial losses occurring to the ship, cargo, or any other interest in consequence of marine perils which do not come under general average. While "general average" refers to losses arising from voluntary sacrifice, particular average refers to

No sacrifice is made in par

losses resulting from accident. ticular average for the common benefit; no claim can therefore be made for compensation by general contribution. The loss must fall exclusively upon those who own or have an interest in the property lost or damaged, unless the same is insured, in which case restitution is made by the insurer.

Generally speaking, the underwriter's liability for particular average on hulls is measured by the reasonable actual cost of repairs after deducting "one third new for old" (the allowance frequently made as a commutation of new for old), and after crediting the underwriter with the value of the old material. In the case of a damaged cargo, the liability is usually represented by the difference between the gross sound value of the goods and the gross proceeds obtained from their sale, the percentage of loss thus ascertained being then applied to the amount of insurance carried. In the case of freight, the underwriter's liability is based on the insured value of the freight, and varies in proportion to the extent that the cargo is lost.

4. Salvage. By salvage in marine insurance is meant the reward granted by law for services in saving life and property at sea. To be a true case of salvage, the service must have been of material assistance in saving the property, and must have come from third parties. The sum payable for the service is usually apportioned over the values of the various interests saved, just as in the case of general average, and is recovered from the underwriter in exactly the same manner, provided the contributing interests are insured.

CHAPTER XXVII

POLICY PROVISIONS PROTECTING THE INSURER AGAINST FRAUD, UNNECESSARY LOSS, AND

UNDESIRABLE RISKS

MUCH the larger part of every marine policy consists of provisions which have for their object the protection of the insurer against fraud, unnecessary losses, and undesirable risks. The whole number of such provisions in the policies of the leading companies cannot be given here, and only those provisions which are now generally included in the policies of the principal companies will be presented. In doing this it is convenient to group these provisions under the following heads:

1. Other Insurance upon the Same Subject Matter.-That part of the marine policy relating to "other insurance" has reference to the liability of the insurer where the same property has been insured with two or more companies. In England this problem is solved by granting the insured the right to collect indemnity from whichever policy he pleases, the underwriter of this policy in turn possessing the right to collect a ratable contribution from the other underwriters who insured the same risk. Thus, where, without intention to commit fraud, the same property is insured equally with two companies, the insured may collect the whole loss from one company, which, in turn, will collect from the other one half the sum thus paid. Where the sum insured is not the same for both underwriters, the case is considered one of double insurance of the amount represented by the smaller of the two policies.

As compared with the above rules, the practice in the United States is different. Instead of permitting the insured to collect from any policy he may choose, the liability of the underwriters depends upon the date of the policy. If its policy is the first one taken, and covers the value of the interest, then it alone must bear the loss. Only when the amount insured by the first policy fails to cover the value of the interest lost, do the later policies become contributors. In accordance with this principle, practically all American policies provide that "it is hereby agreed that if the said insured shall have made any other insurance upon the property aforesaid, prior in date to this policy, then the said insurance company shall be answerable only for so much as the amount of such prior insurance may be deficient toward fully covering the property hereby insured, and the said insurance company shall return the premium upon so much of the sum by them insured as they shall be by such prior insurance exonerated from; provided no return premium shall be made for any passage whereon the risks have once commenced. And in case of any insurance upon the said property subsequent in date to this policy the said insurance company shall nevertheless be answerable for the full extent of the sum by them subscribed hereto, without right to claim contribution from such subsequent insurers, and shall accordingly be entitled to retain the premium by them received, in the same manner as if no such subsequent insurance had been made." Most American policies also stipulate that "other insurance upon the premises aforesaid, of date the same day as this policy, shall be deemed simultaneous herewith, and the company shall not be liable for more than a ratable contribution in the proportion that the sum by them insured bears to the aggregate of such simultaneous insurance."

2. The "Sue and Labor" and " Waiver" Clauses.-The universal employment of these clauses in marine policies justifies their reproduction in full, namely: "And in case of

any loss or misfortune, it shall be lawful and necessary for the insured, his or their factors, servants, or assigns, to sue, labor, and travel for, in, and about the defence, safeguard, and recovery of the said property or any part thereof, without prejudice to this insurance; to the charges whereof the said insurance company will contribute in proportion as the sum insured is to the whole sum at risk; and the acts of the insured or insurers in recovering, saving, and preserving the property insured in case of disaster, shall not be considered a waiver or acceptance of an abandonment." The insured, in other words, agrees to exert himself in preventing or minimizing the loss of the insured property in the same manner that he would if uninsured. The company, in turn, promises to bear all expenses thus honestly and prudently incurred by the insured in a proportion such that if the policy covers the full value of the interest it will pay all “sue and labor" charges. Both insured and underwriter then agree that no act of theirs coming under the "sue and labor clause' shall constitute a waiver or an acceptance of an abandonment.

3. The "Memorandum.". -This clause may be defined as consisting of an enumeration of articles arranged in groups, concerning which there is a limitation of the underwriter's liability for particular average. In its original form Lloyd's policy placed no limit upon the liability of the insurer. The development of the marine-insurance business, however, and the growing complexity of commerce soon demonstrated that some limitation was essential. Hence, in 1749, a clause called the "memorandum" was inserted, according to which the most important articles of trade were classified into three groups, and each group subjected to a definite limitation as regards the liability of the underwriter. A similar limitation was introduced in American policies in 1840, and today the Memorandum is a conspicuous feature in every cargo policy. Indeed, so detailed has the "memorandum" become

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