THE MARINE INSURANCE ACT, 1963                                                                                                                                        

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ARRANGEMENT OF SECTIONS                                                                                                            

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SECTIONS 

1. Short title and commencement. 

2. Definitions. 

3. Marine insurance defined. 

4. Mixed sea and land risks. 

5. Lawful marine adventure. 

6. Avoidance of wagering contracts. 

7. Insurable interest defined. 

8. When interest must attach. 

9. Defeasible or contingent interest. 

10. Partial interest. 

11. Reinsurance. 

12. Bottomry. 

13. Master’s and seamen’s wages. 

14. Advance freight. 

15. Charges of insurance. 

16. Quantum of interest. 

17. Assignment of interest. 

18. Measure of insurable value. 

MARINE INSURANCE 

INSURABLE INTEREST 

INSURABLE VALUE 

DISCLOSURE AND REPRESENTATIONS 

19. Insurance is uberrimae fidei. 

20. Disclosure by assured. 

21. Disclosure by agent effecting insurance. 

22. Representations pending negotiation of contract. 

23. When contract is deemed to be concluded. 

THE POLICY 

24. Contract must be embodied in policy. 
25. What policy must specify. 
26. Signature of insurer. 
27. Voyage and time policies. 
28. Designation and subject-matter. 

29. Valued policy. 

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SECTIONS 

30. Unvalued policy. 

31. Floating policy by ship or ships. 

32. Construction of terms in policy. 

33. Premium to be arranged. 

34. Double insurance. 

DOUBLE INSURANCE 

WARRANTIES, ETC. 

35. Nature of warranty. 

36. When breach of warranty excused. 

37. Express warranties. 

38. Warranty of neutrality. 

39. No implied warranty of nationality. 

40. Warranty of good safety. 

41. Warranty of seaworthiness of ship. 

42. No implied warranty that goods are seaworthy. 

43. Warranty of legality. 

44. Implied condition as to commencement of risk. 

THE VOYAGE 

45. Alteration of port of departure. 

46. Sailing for different destination. 

47. Change of voyage. 

48. Deviation. 

49. Several ports of discharge. 

50. Delay in voyage. 

51. Excuse for deviation or delay. 

ASSIGNMENT OF POLICY 

52. When and how policy is assignable. 

53. Assured who has no interest cannot assign. 

THE PREMIUM 

LOSS AND ABANDONMENT 

54. When premium payable. 

55. Included and excluded losses. 

56. Partial and total loss. 

57. Actual total loss. 

58. Missing ship. 

59. Effect of transhipment, etc. 

60. Constructive total loss defined. 

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SECTIONS 

61. Effect of constructive total loss. 

62. Notice of abandonment. 

63. Effect of abandonment. 

PARTIAL LOSSES (INCLUDING SALVAGE AND GENERAL AVERAGE AND PARTICULAR CHARGES) 

64. Particular average loss. 

65. Salvage charges. 

66. General average loss. 

MEASURE OF INDEMNITY 

67. Extent of liability of insurer for loss. 
68. Total loss. 
69. Partial loss of ship. 
70. Partial loss of freight. 
71. Partial loss of goods, merchandise, etc. 
72. Apportionment of valuation. 
73. General average contributions and salvage charges. 
74. Liabilities to third parties. 
75. General provisions as to measure of indemnity. 
76. Particular average warranties. 
77. Successive losses. 
78. Suing and labouring clause. 

RIGHTS OF INSURER ON PAYMENTS 

79. Right of subrogation. 
80. Right of contribution. 
81. Effect of under-insurance. 

RETURN OF PREMIUM 

82. Enforcement of return. 

83. Return by agreement. 

84. Return for failure of consideration. 

SUPPLEMENTAL 

85. Ratification by assured. 
86. Implied obligation varied by agreement or usage. 
87. Reasonable time, etc., a question of fact. 
88. Covering note as evidence. 
89. Power to apply Act with modifications, etc., in certain cases. 
90. Certain provisions to override Transfer of Property Act, 1882. 
91. Savings. 
92. [Repealed.] 

SCHEDULE.—FORM OF POLICY. 

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THE MARINE INSURANCE ACT, 1963 

ACT NO. 11 OF 1963 

[18th April, 1963.] 

An Act to codify the law relating to marine insurance. 

BE it enacted by Parliament in the Fourteenth Year of the Republic of India as follows:— 

1. Short title and commencement.—(1) This Act may be called the Marine Insurance Act, 1963. 
(2)  It  shall  come  into  force  on  such  date1  as  the  Central  Government  may,  by  notification  in  the 

Official Gazette, appoint. 

2. Definitions.—In this Act, unless the context otherwise requires,— 

(a) “contract of marine insurance” means a contract of marine insurance as defined by section 3; 

(b)  “freight”  includes  the  profit  derivable  by  a  ship-owner  from  the  employment  of  his  ship  to 
carry  his  own  goods  or  other  movables,  as  well  as  freight  payable  by  a  third  party,  but  does  not 
include passage money; 

(c) “insurable property” means any ship, goods or other movables which are exposed to maritime 

perils; 

(d) “marine adventure” includes any adventure where— 

(i) any insurable property is exposed to maritime perils; 

(ii)  the  earnings  or  acquisition  of  any  freight,  passage  money,  commission,  profit  or  other 
pecuniary benefit, or the security for any advances, loans, or disbursements is endangered by the 
exposure of insurable property to maritime perils; 

(iii) any liability to a third party may be incurred by the owner of, or other person interested 

in or responsible for, insurable property by reason of maritime perils; 

(e) “maritime perils” means the perils consequent on, or incidental to, the navigation of the sea, 
that is to say, perils of the seas, fire, war perils, pirates, rovers, thieves, captures, seizures, restraints 
and detainments of princes and peoples, jettisons, barratry and any other perils which are either of the 
like kind or may be designated by the policy; 

(f)  “movables”  means any  movable  tangible  property,  other than  the  ship, and includes  money, 

valuable securities and other documents; 

(g) “policy” means a marine policy; 

(h) “ship” includes every description of vessel used in navigation; 

(i) “suit” includes counter-claim and set-off. 

MARINE INSURANCE 

3. Marine insurance defined.—A contract of marine insurance is an agreement whereby the insurer 
undertakes  to  indemnify  the  assured,  in  the  manner  and  to  the  extent  thereby  agreed,  against  marine 
losses, that is to say, the losses incidental to marine adventure. 

4. Mixed sea and land risks.—(1) A contract of marine insurance may, by its express terms, or by 
usage of trade, be extended so as to protect the assured against losses on inland waters or on any land risk 
which may be incidental to any sea voyage. 

(2) Where a ship in course of building or the launch of a ship, or any adventure analogous to a marine 
adventure, is covered by a policy in the form of a marine policy, the provisions of this Act, in so far as 
applicable,  shall apply thereto,  but  except as by  this section  provided,  nothing  in  this  Act  shall  alter  or 

1. 1st August, 1963, vide notification No. S.O. 1925, dated 8th July, 1963, see Gazette of India, Extraordinary, Part II, sec. 3(ii). 

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affect any rule of law applicable to any contract of insurance other than a contract of marine insurance as 
by this Act defined. 

Explanation.—“An  adventure  analogous  to  a  marine  adventure”  includes  an  adventure  where  any 

ship, goods or other movables are exposed to perils incidental to local or inland transit. 

5. Lawful marine adventure.—Subject to the provisions of this Act, every lawful marine adventure 

may be the subject of a contract of marine insurance. 

INSURABLE INTEREST 

6. Avoidance of wagering contracts.—(1) Every contract of marine insurance by way of wagering is 

void. 

(2) A contract of marine insurance is deemed to be a wagering contract:— 

(a)  where  the  assured  has  not  an  insurable  interest  as  defined  by  this  Act,  and  the  contract  is 

entered into with no expectation of acquiring such an interest; or 

(b) where the policy is made “interest or no interest”, or “without further proof of interest than the 

policy itself, or “without benefit of salvage to the insurer”, or subject to any other like term: 

Provided that,  where  there  is  no  possibility  of  salvage,  a policy  may  be  effected  without  benefit  of 

salvage to the insurer. 

7.  Insurable  interest  defined.—(1)  Subject  to  the  provisions  of  this  Act,  every  person  has  an 

insurable interest who is interested in a marine adventure. 

(2) In particular a person is interested in a marine adventure where he stands in any legal or equitable 
relation  to  the  adventure  or  to  any  insurable  property  at  risk  therein,  in  consequence  of  which  he  may 
benefit by the safety or due arrival of insurable property, or may be prejudiced by its loss, or by damage 
thereto, or by the detention thereof, or may incur liability in respect thereof. 

8. When interest must attach.—(1) The assured must be interested in the subject-matter insured at 

the time of the loss, though he need not be interested when the insurance is effected: 

Provided that, where the subject-matter is insured “lost or not lost”, the assured may recover although 
he may not have acquired his interest until after the loss, unless at the time of effecting the contract of 
insurance the assured was aware of the loss, and the insurer was not. 

(2) Where the assured has no interest at the time of the loss, he cannot acquire interest by any act or 

election after he is aware of the loss. 

9. Defeasible or contingent interest.—(1) A defeasible interest is insurable, as also is a contingent 

interest. 

(2)  In  particular,  where  the  buyer  of  goods  has  insured  them,  he  has  an  insurable  interest, 
notwithstanding  that  he  might,  at  his  election,  have  rejected  the  goods,  or  have  treated  them  as  at  the 
seller’s risk, by reason of the latter’s delay in making delivery or otherwise. 

10. Partial interest.—A partial interest of any nature is insurable. 

11. Reinsurance.—(1) The insurer under a contract of marine insurance has an insurable interest in 

his risk, and may reinsure in respect of it. 

(2)  Unless  the  policy  otherwise  provides,  the  original  assured  has  no  right  or  interest  in  respect  of 

such reinsurance. 

12. Bottomry.—The lender of money on bottomry or respondentia has an insurable interest in respect 

of the loan. 

13.  Master’s  and  seamen’s  wages.—The  master  or  any  member  of  the  crew  of  a  ship  has  an 

insurable interest in respect of his wages. 

14.  Advance  freight.—In  the  case  of  advance  freight,  the  person  advancing  the  freight  has  an 

insurable interest, in so far as such freight is not repayable in case of loss. 

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15.  Charges  of  insurance.—The  assured  has  an  insurable  interest  in  the  charges  of  any  insurance 

which he may effect. 

16. Quantum of interest.—(1) Where the subject-matter insured is mortgaged, the mortgagor has an 
insurable interest in the full value thereof, and the mortgagee has an insurable interest in respect of any 
sum due or to become due under the mortgage. 

(2)  A  mortgagee,  consignee,  or  other  person  having  an  interest  in  the  subject-matter  insured  may 

insure on behalf and for the benefit of other persons interested as well as for his own benefit. 

(3)  The  owner  of  insurable  property  has  an  insurable  interest  in  respect  of  the  full  value  thereof, 

notwithstanding that some third person may have agreed, or be liable to indemnify him in case of loss. 

17.  Assignment  of  interest.—Where  the  assured  assigns  or  otherwise  parts  with  his interest  in the 
subject-matter  insured,  he  does  not  thereby  transfer  to  the  assignee  his  rights  under  the  contract  of 
insurance, unless there be an express or implied agreement with the assignee to that effect. 

But the provisions of this section do not affect transmission of interest by operation of law. 

INSURABLE VALUE 

18.  Measure  of  insurable  value.—Subject  to  any  express  provision  or  valuation  in  the  policy,  the 

insurable value of the subject-matter insured must be ascertained as follows:— 

(1) In insurance on ship, the insurable value is the value, at the commencement of the risk, of the 
ship,  including  her  outfit,  provisions,  and  stores  for  the  officers  and  crew,  money  advanced  for 
seamen’s  wages,  and  other  disbursements  (if  any)  incurred  to  make  the  ship  fit  for  the  voyage  or 
adventure contemplated by the policy, plus the charges of insurance upon the whole. 

The insurable value, in the case of a steamship, includes also the machinery, boilers, and coals 
and  engine  stores if  owned  by  the  assured;  in the  case  of  a  ship  driven  by  power  other than steam 
includes also the machinery and fuels and engine stores, if owned by the assured; and in the case of a 
ship engaged in a special trade, includes also the ordinary fittings requisite for that trade. 

(2) In insurance on freight, whether paid in advance or otherwise, the insurable value is the gross 

amount of the freight at the risk of the assured, plus the charges of insurance. 

(3) In insurance on goods or merchandise, the insurable value is the prime cost of the property 
insured, plus the expenses of and incidental to shipping and the charges of insurance upon the whole. 

(4) In insurance on any other subject-matter, the insurable value is the amount at the risk of the 

assured when the policy attaches, plus the charges of insurance. 

DISCLOSURE AND REPRESENTATIONS 

19.  Insurance  is  uberrimae  fidei.—A  contract  of  marine  insurance  is  a  contract  based  upon  the 
utmost  good  faith,  and  if  the  utmost  good  faith  be  not  observed  by  either  party,  the  contract  may  be 
avoided by the other party. 

20. Disclosure by assured.—(1) Subject to the provisions of this section, the assured must disclose to 
the insurer, before the contract is concluded, every material circumstance which, is known to the assured, 
and the assured is deemed to know every circumstance which, in the ordinary course of business, ought to 
be known to him. If the assured fails to make such disclosure, the insurer may avoid the contract. 

(2) Every circumstance is material which would influence the judgment of a prudent insurer in fixing 

the premium, or determining whether he will take the risk. 

(3) In the absence of inquiry the following circumstances need not be disclosed, namely:— 

(a) any circumstance which diminishes the risk; 

(b)  any  circumstance  which  is  known  or  presumed  to  be  known  to  the  insurer.  The  insurer  is 
presumed to know matters of common notoriety or knowledge, and matters which an insurer in the 
ordinary course of his business as such ought to know; 

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(c) any circumstance as to which information is waived by the insurer; 

(d)  any  circumstance  which  it  is  superfluous  to  disclose  by  reason  of  any  express  or  implied 

warranty. 

(4) Whether any particular circumstance, which is not disclosed, be material or not is, in each case, a 

question of fact. 

(5) The term  “circumstance” includes any communication made to, or information received by, the 

assured. 

21. Disclosure by agent effecting insurance.—Subject to the provisions of the preceding section as 
to circumstances which need not be disclosed, where an insurance is effected for the assured by an agent, 
the agent must disclose to the insurer— 

(a) every material circumstance which is known to himself, and an agent to insure is deemed to 
know every circumstance which in the ordinary course of business ought to be known by, or to have 
been communicated to, him; and 

(b)  every  material  circumstance  which  the  assured  is  bound  to  disclose,  unless  it  comes  to  his 

knowledge too late to communicate it to the agent. 

22. Representations pending negotiation of contract.—(1) Every material representation made by 
the assured or his agent to the insurer during the negotiations for the contract, and before the contract is 
concluded, must be true. If it be untrue the insurer may avoid the contract. 

(2) A representation is material which would influence the judgment of a prudent insurer in fixing the 

premium, or determining whether he will take the risk. 

(3) A representation may be either as to a matter of fact, or as to a matter of expectation or belief. 

(4) A representation as to a matter of fact is true, if it be substantially correct, that is to say, if the 
difference between what is represented and what is actually correct would not be considered material by a 
prudent insurer. 

(5) A representation as to a matter of expectation or belief is true if it be made in good faith. 

(6) A representation may be withdrawn or corrected before the contract is concluded. 

(7) Whether a particular representation be material or not, is, in each case, a question of fact. 

23. When contract is deemed to be concluded.—A contract of marine insurance is deemed to be 
concluded when the proposal of the assured is accepted by the insurer, whether the policy be then issued 
or not; and for the purpose of showing when the proposal was accepted, reference may be made to the 
slip, covering note or other customary memorandum of the contract, although it be unstamped. 

THE POLICY 

24. Contract must be embodied in policy.—A contract of marine insurance shall not be admitted in 
evidence  unless  it  is  embodied  in  a  marine  policy  in  accordance  with  this  Act.  The  policy  may  be 
executed and issued either at the time when the contract is concluded, or afterwards. 

25. What policy must specify.—A marine policy must specify— 

(1) the name of the assured, or of some person who effects the insurance on his behalf; 

(2) the subject-matter insured and the risk insured against; 

(3) the voyage, or period of time, or both, as the case may be, covered by the insurance; 

(4) the sum or sums insured; 

(5) the name or names of the insurer or insurers. 

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26. Signature of insurer.—(1) A marine policy must be signed by or on behalf of the insurer. 

(2) Where a policy is subscribed by or on behalf of two or more insurers, each subscription, unless the 

contrary be expressed, constitutes a distinct contract with the assured. 

27. Voyage and time policies.—(1) Where the contract is to insure the subject-matter at and from, or 
from one place to another or others, the policy is called a “voyage policy”, and, where the contract is to 
insure the subject-matter for a definite period of time, the policy is called a “time policy”. A contract for 
both voyage and time may be included in the same policy. 

(2) A time policy which is made for any time exceeding twelve months is invalid. 

28.  Designation  and  subject-matter.—(1)  The  subject-matter  insured  must  be  designated  in  a 

marine policy with reasonable certainty. 

(2)  The  nature  and  extent  of  the  interest  of  the  assured  in  the  subject-matter  insured  need  not  be 

specified in the policy. 

(3) Where the policy designates the subject-matter insured in general terms, it shall be construed to 

apply to the interest intended by the assured to be covered. 

(4) In the application of this section regard shall be had to any usage regulating the designation of the 

subject-matter insured. 

29. Valued policy.—(1) A policy may be either valued or unvalued. 

(2) A valued policy is a policy which specifies the agreed value of the subject-matter insured. 

(3) Subject to the provisions of this Act, and in the absence of fraud, the value fixed by the policy is, 
as between the insurer and assured, conclusive of the insurable value of the subject intended to be insured, 
whether the loss be total or partial. 

(4)  Unless  the  policy  otherwise  provides,  the  value  fixed  by  the  policy  is  not  conclusive  for  the 

purpose of determining whether there has been a constructive total loss. 

30.  Unvalued  policy.—An  unvalued  policy  is  a  policy  which  does  not  specify  the  value  of  the 
subject-matter  insured,  but  subject  to  the  limit  of  the  sum  insured,  leaves  the  insurable  value  to  be 
subsequently ascertained, in the manner hereinbefore explained. 

31. Floating policy by ship or ships.—(1) A floating policy is a policy which describes the insurance 
in general terms, and leaves the name or names of the ship or ships and other particulars to be defined by 
subsequent declaration. 

(2) The subsequent declaration or declarations may be made by endorsement on the policy, or in other 

customary manner. 

(3) Unless the policy otherwise provides, the declarations must be made in the order of dispatch or 
shipment. They must, in the case of goods, comprise all consignments within the terms of the policy, and 
the value of the goods or other property must be honestly stated, but an omission or erroneous declaration 
may be rectified even after loss or arrival, provided the omission or declaration was made in good faith. 

(4) Unless the policy otherwise provides, where a declaration of value is not made until after notice of 
loss  or  arrival,  the  policy  must  be  treated  as  an  unvalued  policy  as  regards  the  subject-matter  of  that 
declaration. 

32. Construction of terms in policy.—(1) A policy may be in the form in the Schedule. 

(2) Subject to the provisions of this Act, and unless the context of the policy otherwise requires, the 
terms  and  expressions  mentioned  in  the  Schedule  shall  be  construed  as  having  the  scope  and  meaning 
assigned to them in the Schedule. 

33. Premium to be arranged.—(1) Where an insurance is effected at a premium to be arranged, and 

no arrangement is made, a reasonable premium is payable. 

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(2)  Where  an  insurance  is  effected  on  the  terms  that  an  additional  premium  is  to  be  arranged  in  a 
given event, and that event happens but no arrangement is made, then a reasonable additional premium is 
payable. 

DOUBLE INSURANCE 

34. Double insurance.—(1) Where two or more policies are effected by or on behalf of the assured 
on  the  same  adventure  and  interest  or  any  part  thereof,  and  the  sums  insured  exceed  the  indemnity 
allowed by this Act, the assured is said to be over-insured by double insurance. 

(2) Where the assured is over-insured by double insurance— 

(a)  the  assured,  unless  the  policy  otherwise  provides,  may  claim  payment  from  the  insurers  in 
such order as he  may  think  fit,  provided that  he  is  not  entitled  to  receive  any  sum  in  excess of the 
indemnity allowed by this Act; 

(b)  where  the  policy  under  which  the  assured  claims  is  a  valued  policy,  the  assured  must  give 
credit as against the valuation, for any sum received by him under any other policy, without regard to 
the actual value of the subject-matter insured; 

(c) where the policy under which the assured claims is an unvalued policy he must give credit, as 

against the full insurable value, for any sum received by him under any other policy; 

(d)  where  the  assured  receives  any  sum  in  excess  of  the  indemnity  allowed  by  this  Act,  he  is 
deemed  to  hold  such  sum  in  trust  for  the  insurers,  according  to  their  right  of  contribution  among 
themselves. 

WARRANTIES, ETC. 

35. Nature of warranty.—(1) A warranty, in the following sections relating to warranties, means a 
promissory warranty, that is to say a warranty by which the assured undertakes that some particular thing 
shall or shall not be done, or that some condition shall be fulfilled, or whereby he affirms or negatives the 
existence of a particular state of facts. 

(2) A warranty may be express or implied. 

(3) A warranty, as above defined, is a condition which must be exactly complied with, whether it be 
material  to  the  risk  or  not.  If  it  be  not  so  complied  with,  then,  subject  to  any  express  provision  in  the 
policy,  the  insurer  is  discharged  from  liability  as  from  the  date  of  the  breach  of  warranty,  but  without 
prejudice to any liability incurred by him before that date. 

36. When breach of warranty excused.—(1) Non-compliance with a warranty is excused when, by 
reason  of  a  change  of  circumstances,  the  warranty  ceases  to  be  applicable  to  the  circumstances  of  the 
contract, or when compliance with the warranty is rendered unlawful by any subsequent law. 

(2) Where a warranty is broken, the assured cannot avail himself of the defence that the breach has 

been remedied, and the warranty complied with before loss. 

(3) A breach of warranty may be waived by the insurer. 

37.  Express  warranties.—(1)  An  express  warranty  may  be  in  any  form  of  words  from  which  the 

intention to warrant is to be inferred. 

(2)  An  express  warranty  must  be  included  in,  or  written  upon,  the  policy,  or  must  be  contained  in 

some document incorporated by reference into the policy. 

(3) An express warranty does not exclude implied warranty, unless it be inconsistent therewith. 

38.  Warranty  of  neutrality.—(1)  Where  insurable  property,  whether  ship  or  goods,  is  expressly 
warranted  neutral,  there  is  an  implied  condition  that  the  property  shall  have  a  neutral  character  at  the 
commencement of the risk, and that, so far as the assured can control the matter, its neutral character shall 
be preserved during the risk. 

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(2) Where a ship is expressly warranted “neutral”, there is also an implied condition that, so far as the 
assured can control the matter, she shall be properly documented, that is to say, that she shall carry the 
necessary papers to establish her neutrality, and that she shall not falsify or suppress her papers, or use 
simulated papers. If any loss occurs through breach of this condition, the insurer may avoid the contract. 

39.  No  implied  warranty  of  nationality.—There  is  no  implied  warranty  as  to  the  nationality  of  a 

ship, or that her nationality shall not be changed during the risk. 

40.  Warranty  of  good  safety.—Where  the  subject-matter  insured  is  warranted  “well”  or  “in  good 

safety” on a particular day, it is sufficient if it be safe at any time during that day. 

41. Warranty of seaworthiness of ship.—(1) In a voyage policy there is an implied warranty that at 
the commencement of the voyage the ship shall be seaworthy for the purpose of the particular adventure 
insured. 

(2) Where the policy attaches while the ship is in port, there is also an implied warranty that she shall, 

at the commencement of the risk, be reasonably fit to encounter the ordinary perils of the port. 

(3) Where the policy relates to a voyage which is performed in different stages, during which the ship 
requires  different  kinds  of or  further  preparation  or  equipment,  there is  an  implied  warranty  that  at  the 
commencement of each stage the ship is seaworthy in respect of such preparation or equipment for the 
purposes of that stage. 

(4)  A  ship  is  deemed  to  be  seaworthy  when  she  is  reasonably  fit  in  all  respects  to  encounter  the 

ordinary perils of the seas of the adventure insured. 

(5) In a time policy there is no implied warranty that the ship shall be seaworthy at any stage of the 
adventure, but where, with the privity of the assured, the ship is sent to sea in an unseaworthy state, the 
insurer is not liable for any loss attributable to unseaworthiness. 

42. No implied warranty that goods are seaworthy.—(1) In a policy on goods or other moveable 

there is no implied warranty that the goods or movables are seaworthy. 

(2)  In  a  voyage  policy  on  goods  or  other  movables  there  is  an  implied  warranty  that  at  the 
commencement of the voyage the ship is not only seaworthy as a ship, but also that she is reasonably fit 
to carry the goods or other movables to the destination contemplated by the policy. 

43. Warranty of legality.—There is an implied warranty that the adventure insured is a lawful one, 
and  that,  so  far  as  the  assured  can  control  the  matter,  the  adventure  shall  be  carried  out  in  a  lawful 
manner. 

THE VOYAGE 

44. Implied condition as to commencement of risk.—(1) Where the subject-matter is insured by a 
voyage policy “at and from” or “from” a particular place, it is not necessary that the ship should be at that 
place  when  the  contract  is  concluded,  but  there  is  an  implied  condition  that  the  adventure  shall  be 
commenced  within  a  reasonable  time,  and  that  if  the  adventure  be  not  so  commenced  the  insurer  may 
avoid the contract. 

(2) The implied condition may be negatived by showing that the delay was caused by circumstances 

known to the insurer before the contract was concluded, or by showing that he waived the condition. 

45. Alteration of port of departure.—Where the place of departure is specified by the policy, and 

the ship instead of sailing from that place sails from any other place, the risk does not attach. 

46. Sailing for different destination.—Where the destination is specified in the policy, and the ship, 

instead of sailing for that destination, sails for any other destination, the risk does not attach. 

47. Change of voyage.—(1) Where, after the commencement of the risk, the destination of the ship is 
voluntarily  changed  from  the  destination  contemplated  by  the  policy,  there  is  said  to  be  a  change  of 
voyage. 

10 

 
 
 
(2) Unless the policy otherwise provides, where there is a change of voyage, the insurer is discharged 
from  liability  as  from  the  time  of  change,  that  is  to  say,  as  from  the  time  when  the  determination  to 
change it is manifested; and it is immaterial that the ship may not in fact have left the course of voyage 
contemplated by the policy when the loss occurs. 

48. Deviation.—(1) Where a ship, without lawful excused, deviates from the voyage contemplated by 
the policy, the insured is discharged from liability as from the time of deviation, and it is immaterial that 
the ship may have regained her route before any loss occurs. 

(2) There is a deviation from the voyage contemplated by the policy— 

(a)  where  the  course  of  the  voyage  is  specifically  designated  by  the  policy,  and  that  course  is 

departed from; or 

(b) where the course of the voyage is not specifically designated by the policy, but the usual and 

customary course is departed from. 

(3) The intention to deviate is immaterial; there must be a deviation in fact to discharge the insurer 

from his liability under the contract. 

49. Several ports of discharge.—(1) Where several ports of discharge are specified by the policy, 
the  ship  may  proceed to  all  or  any  of  them,  but, in  the  absence of  any  usage  or  sufficient cause  to the 
contrary, she must proceed to them, or such of them as she goes to, in the order designated by the policy. 
If she does not, there is a deviation. 

(2) Where the policy is to “ports of discharge”, within a given area, which are not named, the ship 
must, in the absence of any usage or sufficient cause to the contrary, proceed to them, or such of them as 
she goes to, in their geographical order. If she does not, there is a deviation. 

50.  Delay  in  voyage.—In  the  case  of  a  voyage  policy,  the  adventure  insured  must  be  prosecuted 
throughout its course with reasonable dispatch, and, if without lawful excuse it is not so prosecuted, the 
insurer is discharged from liability as from the time when the delay became unreasonable. 

51. Excuse for deviation or delay.—(1) Deviation or delay in prosecuting the voyage contemplated 

by the policy is excused— 

(a) where authorised by any special term in the policy; or 

(b) where caused by circumstances beyond the control of the master and his employer; or 

(c) where reasonably necessary in order to comply with an express or implied warranty; or 

(d) where reasonably necessary for the safety of the ship or subject-matter insured; or 

(e) for the purpose of saving human life or aiding a ship in distress where human life may be in 

danger; or 

(f) where reasonably necessary for the purpose of obtaining medical or surgical aid for any person 

on board the ship; or 

(g) where caused by the barratrous conduct of the master or crew, if barratry be one of the perils 

insured against. 

(2)  When  the  cause  excusing  the  deviation  or  delay  ceases  to  operate,  the  ship  must  resume  her 

course, and prosecute her voyage with reasonable dispatch. 

ASSIGNMENT OF POLICY 

52.  When  and  how  policy  is  assignable.—(1)  A  marine  policy  may  be  transferred  by  assignment 

unless it contains terms expressly prohibiting assignment. It may be assigned either before or after loss. 

(2) Where a marine policy has been assigned so as to pass the beneficial interest in such policy, the 
assignee of the policy is entitled to sue thereon in his own name; and the defendant is entitled to make any 
defence arising out of the contract which he would have been entitled to make if the suit had been brought 
in the name of the person by or on behalf of whom the policy was effected. 

11 

 
(3) A marine policy may be assigned by endorsement thereon or in other customary manner. 

53.  Assured  who  has  no  interest  cannot  assign.—Where  the  assured  has  parted  with  or  lost  his 
interest in the subject-matter insured, and has not, before or at the time of so doing expressly or impliedly 
agreed to assign the policy, any subsequent assignment of the policy is inoperative: 

Provided that nothing in this section affects the assignment of a policy after loss. 

THE PREMIUM 

54. When premium payable.—Unless otherwise agreed, the duty of the assured or his agent to pay 
the  premium,  and  the  duty  of the  insurer to issue the  policy  to the  assured  or  his  agent,  are concurrent 
conditions, and the insurer is not bound to issue the policy until payment or tender of the premium. 

LOSS AND ABANDONMENT 

55. Included and excluded losses.—(1) Subject to the provisions of this Act, and unless the policy 
otherwise provides, the insurer is liable for any loss proximately caused by a peril insured  against, but, 
subject  as  aforesaid,  he  is  not  liable  for  any  loss  which  is  not  proximately  caused  by  a  peril  insured 
against. 

(2) In particular— 

(a) the insurer is not liable for any loss attributable to the wilful misconduct of the assured, but, 
unless the policy otherwise provides, he is liable for any loss proximately caused by a peril insured 
against, even though the loss would not have happened but for the misconduct or negligence of the 
master or crew; 

(b)  unless the policy  otherwise  provides,  the  insurer on  ship  or  goods  is  not liable for any  loss 

proximately caused by delay, although the delay be caused by a peril insured against; 

(c)  unless  the  policy  otherwise  provides,  the  insurer  is  not  liable  for  ordinary  wear  and  tear, 
ordinary leakage and breakage, inherent vice or nature of the subject-matter insured, or for any loss 
proximately  caused  by  rats  or  vermin,  or  for  any  injury  to  machinery  not  proximately  caused  by 
maritime perils. 

56. Partial and total loss.—(1) A loss may be either total or partial. Any loss other than a total loss, 

as hereinafter defined, is a partial loss. 

(2) A total loss may be either an actual total loss, or a constructive total loss. 

(3) Unless a different intention appears from the terms of the policy, an insurance against total loss 

includes a constructive, as well as an actual, total loss. 

(4) Where the assured brings a suit for a total loss and the evidence proves only a partial loss, he may, 

unless the policy otherwise provides, recover for a partial loss. 

(5)  Where  goods  reach  their  destination  in  specie,  but  by  reason  of  obliteration  of  marks,  or 

otherwise, they are incapable of identification, the loss, if any, is partial and not total. 

57. Actual total loss.—(1) Where the subject-matter insured is destroyed, or so damaged as to cease 
to be a thing of the kind insured, or where the assured is irretrievably deprived thereof, there is an actual 
total loss. 

(2) In the case of an actual total loss no notice of abandonment need be given. 

58.  Missing  ship.—Where  the  ship  concerned  in  the  adventure  is  missing,  and  after  the  lapse  of  a 

reasonable time no news of her has been received, an actual total loss may be presumed. 

59.  Effect  of  transhipment,  etc.—Where,  by  a  peril  insured  against,  the  voyage  is  interrupted  at 
intermediate port or place, under such circumstances as, a part from any special stipulation in the contract 
of  a  freightment,  to  justify  the  master  in  landing  and  reshipping  the  goods  or  other  movables,  or  in 
transhipping  them,  and  sending  them  on  to  their  destination,  the  liability  of  the  insurer  continues, 
notwithstanding the landing or transhipment. 

12 

 
60. Constructive total loss defined.—(1) Subject to any express provision in the policy, there is a 
constructive total loss where the subject-matter insured is reasonably abandoned on account of its actual 
total loss appearing to be unavoidable, or because it could not be preserved from actual total loss without 
an expenditure which would exceed its value when the expenditure had been incurred. 

(2) In particular, there is a constructive total loss— 

(i)  where  the  assured  is  deprived  of  the  possession  of  his  ship  or  goods  by  a  peril  insured    

against, and 

(a) it is unlikely that he can recover the ship or goods, as the case may be, or 

(b) the cost of recovering the ship or goods, as the case may be, 

would exceed their value when recovered; or 

(ii) in the case of damage to a ship, where she is so damaged by a peril insured against that the 

cost of repairing the damage would exceed the value of the ship when repaired. 

In  estimating  the  cost  of  repairs,  no  deduction  is  to  be  made  in  respect  of  general  average 
contributions to those repairs payable by other interests, but account is to be taken of the expense of 
future salvage operations and of any future general average contributions to which the ship would be 
liable if required; or 

(iii) In the case of damage to goods, where the cost of repairing the damage and forwarding the 

goods to their destination would exceed their value on arrival. 

61. Effect of constructive total loss.—Where there is a constructive total loss the assured may either 
treat the loss as a partial loss, or abandon the subject-matter insured to the insurer and treat the loss as if it 
were an actual total loss. 

62. Notice of abandonment.—(1) Subject to the provisions of this section, where the assured elects 
to abandon the subject-matter insured to the insurer, he must give notice of abandonment. If he fails to do 
so the loss can only be treated as a partial loss. 

(2) Notice of abandonment may be given in writing, or by word of mouth, or partly in writing and 
partly by word of mouth, and may be given in any terms which indicate the intention of the assured to 
abandon his insured interest in the subject-matter insured unconditionally to the insurer. 

(3)  Notice  of  abandonment  must  be  given  with  reasonable  diligence  after  the  receipt  of  reliable 
information of the loss, but where the information is of a doubtful character the assured is entitled to a 
reasonable time to make enquiry. 

(4) Where notice of abandonment is properly given, the rights of the assured are not prejudiced by the 

fact that the insurer refuses to accept the abandonment. 

(5)  The  acceptance  of  an  abandonment  may  be  either  express  or  implied  from  the  conduct  of  the 

insurer. The mere silence of the insurer after notice is not an acceptance. 

(6) Where notice of abandonment is accepted the abandonment is irrevocable. The acceptance of the 

notice conclusively admits liability for the loss and the sufficiency of the notice. 

(7) Notice of abandonment is unnecessary where at the time when the assured receives information of 

the loss, there would be no possibility of benefit to the insurer if notice were given to him. 

(8) Notice of abandonment may be waived by the insurer. 

(9) When an insurer has reinsured his risk, no notice of abandonment need be given by him. 

63. Effect of abandonment.—(1) Where there is a valid abandonment the insurer is entitled to take 
over the interest of the assured in whatever may remain of the subject-matter insured, and all proprietary 
rights incidental thereto. 

13 

 
 
 
(2) Upon the abandonment of a ship, the insurer thereof is entitled to any freight in course of being 
earned,  and  which  is  earned  by  her  subsequent  to  the  casualty  causing  the  loss,  less  the  expenses  of 
earning  it  incurred  after  the  casualty;  and,  where  the  ship  is  carrying  the  owner’s  goods,  the  insurer  is 
entitled to a reasonable remuneration for the carriage of them subsequent to the casualty causing the loss. 

PARTIAL LOSSES (INCLUDING SALVAGE AND GENERAL AVERAGE AND PARTICULAR CHARGES) 

64.  Particular  average  loss.—(1)  A  particular  average  loss  is  a  partial  loss  of  the  subject-matter 

insured, caused by a peril insured against, and which is not a general average loss. 

(2)  Expenses  incurred  by  or  on  behalf  of  the  assured  for  the  safety  or  preservation  of  the           

subject-matter  insured,  other  than  general  average  and  salvage  charges,  are  called  particular  charges. 
Particularly charges are not included in particular average. 

65. Salvage charges.—(1) Subject to any express provision in the policy, salvage charges incurred in 

preventing a loss by perils insured against may be recovered as a loss by those perils. 

(2) “Salvage charges” means the charges recoverable under maritime law by a salvor independently 
of contract. They do not include the expenses of services in the nature of salvage rendered by the assured 
or his agents, or any person employed for hire by them, for the purpose of averting a peril insured against. 
Such expenses, where properly incurred, may be recovered as particular charges or as a general average 
loss, according to the circumstances under which they were incurred. 

66. General average loss.—(1) A general average loss is a loss caused by or directly consequential 

on a general average act. It includes a general average expenditure as well as a general average sacrifice. 

(2) There is a general average act where any extraordinary sacrifice or expenditure is voluntarily and 
reasonably made or incurred in time of peril for the purpose of preserving the property imperilled in the 
common adventure. 

(3)  Where  there  is  a  general  average  loss,  the  party  on  whom  it  falls  is  entitled,  subject  to  the 
conditions imposed by maritime law, to a rateable contribution from the other parties interested, and such 
contribution is called a general average contribution. 

(4) Subject to any express provision in the policy, where the assured has incurred a general average or 
expenditure,  he  may  recover  from  the  insurer  in  respect  of  the  proportion  of  the  loss  which  falls  upon 
him;  and  in  the  case  of  a  general  average  sacrifice,  he  may  recover  from  the  insurer  in  respect  of  the 
whole loss without having enforced his right of contribution from the other parties liable to contribute. 

(5) Subject to any express provision in the policy, where the assured has paid, or is liable to pay, a 

general average contribution in respect of the interest insured, he may recover therefor from the insurer. 

(6)  In  the  absence  of  express  stipulation,  the  insurer  is  not  liable  for  any  general  average  loss  or 
contribution  where  the  loss  was  not  incurred  for  the  purpose  of  avoiding,  or  in  connection  with  the 
avoidance of a peril insured against. 

(7) Where ship, freight, and cargo, or any two of those interests, are owned by the same assured, the 
liability of the insurer in respect of general average losses or contributions is to be determined as if those 
interests were owned by different persons. 

MEASURE OF INDEMNITY 

67. Extent of liability of insurer for loss.—(1) The sum which the assured can recover in respect of 
a  loss  on  a  policy  by  which  he  is  insured,  in  the  case  of  an  unvalued  policy  to  the  full  extent  of  the 
insurable  value,  or,  in the case  of  a  valued  policy  to the full extent  of  the  value  fixed by  the policy,  is 
called the measure of indemnity. 

(2) Where there is a loss recoverable under the policy, the insurer, or each insurer if there be more 
than one, is liable for such proportion of the measure of indemnity 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. 

14 

 
68.  Total  loss.—Subject  to  the  provisions  of  this  Act,  and  to  any  express  provision  in  the  policy, 

where there is a total loss of the subject-matter insured— 

(1) if the policy be a valued policy, the measure of indemnity is the sum fixed by the policy; 

(2)  if  the  policy  be  an  unvalued  policy,  the  measure  of  indemnity  is  the  insurable  value  of  the   

subject-matter insured. 

69. Partial loss of ship.—Where a ship is damaged, but is not totally 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, but not exceeding the sum insured in respect of any one casualty; 

(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, if any, 
arising from the unrepaired damage, provided that the aggregate amount shall not exceed the cost of 
repairing the whole damage, computed as above; 

(3) where the ship has not been repaired, and has not been sold in her damaged state during the 
risk,  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; 

(4) where the ship has not been repaired, and has been sold in her damaged state during the risk, 
the assured is entitled to be indemnified for the reasonable cost of repairing the damage, computed as 
above, but not exceeding the depreciation in value as ascertained by the sale. 

70. Partial loss of freight.—Subject to any express provision in the policy, where there is a partial 
loss of freight, the measure of indemnity 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. 

71. Partial loss of goods, merchandise, etc.—Where there is a partial loss of goods, merchandise, or 

other movable, the measure of indemnity, subject to any express provision in the policy, is as follows:— 

(1) where part of the goods, merchandise or other movable insured by a valued policy is totally 
lost, the measure of indemnity is such proportion of the sum fixed by the policy as the insurable value 
of the part lost bears to the insurable value of the whole, ascertained as in the case of an unvalued 
policy; 

(2)  where  part  of  the  goods,  merchandise  or  other  movable  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; 

(3) where the whole or any part of the goods or merchandise insured has been delivered damaged 
at its  destination,  the  measure  of  idemnity  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 difference 
between the gross sound and damaged values at the place of arrival bears to the gross sound value; 

(4) “Gross value” means the wholesale price, or, if there be no such price, the estimated value, 
with, in either case, freight, landing charges, and duty paid beforehand; provided that, in the case of 
goods  or  merchandise  customarily  sold  in  bond,  the bonded  price  is  deemed  to  be  the  gross  value. 
“Gross proceeds” means the actual price obtained at a sale where all charges on sale are paid by the 
sellers. 

72. Apportionment of valuation.—(1) Where different species of property are insured under a single 
valuation, the  valuation  must be apportioned  over the  different  species in proportion to  their  respective 
insurable values, as in the case of an unvalued policy. The insured value of any part of a species is such 
proportion of the total insured value of the same as the insurable value of the part bears to the insurable 
value of the whole, ascertained in both cases as provided by this Act. 

15 

 
(2)  Where  a  valuation  has  to  be  apportioned,  and  particulars  of  the  prime  cost  of  each  separate 
species, quality, or description of goods cannot be ascertained, the division of the valuation may be made 
over the net arrived sound values of the different species, qualities, or descriptions of goods. 

73. General average contributions and salvage charges.—(1) Subject to any express provision in 
the policy, where the assured has paid, or is liable for, any general average contribution, the measure of 
indemnity is the full amount of such contribution if the subject-matter liable to contribution is insured for 
its full contributory value; but, if such subject-matter be not insured for its full contributory value, or if  
only  part  of  it  be  insured,  the  indemnity  payable  by  the  insurer  must  be  reduced  in  proportion  to  the 
under-insurance, and where there has been a particular average loss which constitutes a deduction from 
the contributory value, and for which the insurer is liable, that amount must be deducted from the insured 
value in order to ascertain what the insurer is liable to contribute. 

(2) Where the insurer is liable for salvage charges the extent of his liabilities must be determined on 

the like principle. 

74.  Liabilities  to  third  parties.—Where  the  assured  has  effected  an  insurance  in  express  terms 
against  any  liability  to  a  third  party,  the  measure  of  indemnity,  subject  to  any  express  provision  in  the 
policy, is the amount paid or payable by him to such third party in respect of such liability. 

75. General provisions as to measure of indemnity.—(1) Where there has been a loss in respect of 
any  subject-matter  not  expressly  provided  for  in  the  foregoing  provisions  of  this  Act,  the  measure  of 
indemnity  shall  be  ascertained  as  nearly  as  may  be,  in  accordance  with  those  provisions,  in  so  far  as 
applicable to the particular case. 

(2) Nothing in the provisions of this Act relating to the measure of indemnity shall affect the rules 
relating  to  double  insurance,  or  prohibit  the insurer  from  disproving  interest  wholly  or  in  part,  or  from 
showing that at the time of the loss the whole or any part of the subject-matter insured was not at risk 
under the policy. 

76.  Particular  average  warranties.—(1)  Where  the  subject-matter  insured  is  warranted  free  from 
particular average, the assured cannot recover for a loss of part, other than a loss incurred by a general 
average  sacrifice,  unless  the  contract  contained  in  the  policy  be  apportionable;  but,  if  the  contract  be 
apportionable, the assured may recover for a total loss of any apportionable part. 

(2) Where the subject-matter insured is warranted free from particular average, either wholly or under 
a certain percentage, the insurer is nevertheless liable for salvage charges, and for particular charges and 
other expenses properly incurred pursuant to the provisions of the suing and labouring clause in order to 
avert a loss insured against. 

(3)  Unless  the  policy  otherwise  provides,  where  the  subject-matter  insured  is  warranted  free  from 
particular  average  under  a  specified  percentage,  a  general  average  loss  cannot  be  added  to  a  particular 
average loss to make up the specified percentage. 

(4) For the purpose of ascertaining whether the specified percentage has been reached, regard shall be 
had only to the actual loss suffered by the subject-matter insured. Particular charges and the expenses of 
and incidental to ascertaining and proving the loss must be excluded. 

77. Successive losses.—(1) Unless the policy otherwise provides, and subject to the provisions of this 
Act, the insurer is liable for successive losses, even though the total amount of such losses may exceed the 
sum insured. 

(2) Where, under the same policy, a partial loss, which has not been repaired or otherwise made good, 

is followed by a total loss, the assured can only recover in respect of the total loss: 

Provided  that  nothing  in  this  section  shall  affect  the  liability  of  the  insurer  under  the  suing  and 

labouring clause. 

78. Suing and labouring clause.—(1) Where the policy contains a suing and labouring clause, the 
engagement  thereby  entered  into  is  deemed  to  be  supplementary  to  the  contract  of  insurance,  and  the 
assured  may  recover  from  the  insurer  any  expenses  properly  incurred  pursuant  to  the  clause, 

16 

 
notwithstanding that the insurer may have paid for a total loss, or that the subject-matter may have been 
warranted free from particular average, either wholly or under a certain percentage. 

(2)  General  average  losses  and  contributions  and  salvage  charges,  as  defined  by  this  Act,  are  not 

recoverable under the suing and labouring clause. 

(3) Expenses incurred for the purpose of averting or diminishing any loss not covered by the policy 

are not recoverable under the suing and labouring clause. 

(4)  It  is  the  duty  of  the  assured  and  his  agents,  in  all  cases,  to  take  such  measures  as  may  be 

reasonable for the purpose of averting or minimising a loss. 

RIGHTS OF INSURER ON PAYMENTS 

79. Right of subrogation.—(1) Where the insurer pays for a total loss, either of the whole, or in the 
case of goods of any apportionable part, of the subject-matter insured, he thereupon becomes entitled to 
take over the interest of the assured in whatever may remain of the subject-matter so paid for, and he is 
thereby subrogated to all the rights and remedies of the assured in and in respect of that subject-matter as 
from the time of the casualty causing the loss. 

(2) Subject to the foregoing provisions, where the insurer pays for a partial loss, he acquires no title to 
the subject-matter insured, or such part of it as may remain, but he is thereupon subrogated to all rights 
and remedies of the assured in and in respect of the subject-matter insured as from the time of the casualty 
causing the loss, in so far as the assured has been indemnified, according to this Act, by such payment for 
the loss. 

80. Right of contribution.—(1) Where the assured is over-insured by double insurance, each insurer 
is bound, as between himself and the other insurers, to contribute rateably to the loss in proportion to the 
amount for which he is liable under his contract. 

(2)  If  any  insurer  pays  more  than  his  proportion  of  the  loss,  he  is  entitled  to  maintain  a  suit  for 
contribution against the other insurers, and is entitled to the like remedies as a surety who has paid more 
than his proportion of the debt. 

81. Effect of under-insurance.—Where the assured is insured for an amount less than the insurable 
value, or, in the case of a valued policy, for an amount less than the policy valuation, he is deemed to be 
his own insurer in respect of the uninsured balance. 

RETURN OF PREMIUM 

82.  Enforcement  of  return.—Where  the  premium,  or  a  proportionate  part  thereof,  is,  by  this  Act, 

declared to be returnable— 

(a) if already paid, it may be recovered by the assured from the insurer, and, 

(b) if unpaid, it may be retained by the assured or his agent. 

83. Return by agreement.—Where the policy contains a stipulation for the return of the premium, or 
a proportionate part thereof, on the happening of a certain event, and that event happens, the premium, or, 
as the case may be, the proportionate part thereof, is thereupon returnable to the assured. 

84.  Return  for  failure  of  consideration.—(1)  Where  the  consideration  for  the  payment  of  the 
premium totally fails, and there has been no fraud or illegality on the part of the assured or his agents, the 
premium is thereupon returnable to the assured. 

(2)  Where  the  consideration  for  the  payment  of  the  premium  is  apportionable  and  there  is  a  total 
failure of any apportionable part of the consideration, a proportionate part of the premium is, under the 
like conditions, thereupon returnable to the assured. 

(3) In particular:— 

(a) where the policy is void, or is avoided by the insurer as from the commencement of the risk, 
the premium is returnable, provided there has been no fraud or illegality on the part of the assured; 
but if the risk is not apportionable, and has once attached, the premium is not returnable; 

17 

 
(b) where the subject-matter insured, or part thereof, has never been inperilled the premium, or, as 

the case may be, a proportionate part thereof, is returnable: 

Provided  that  where  the  subject-matter  has  been  insured  “lost  or  not  lost”,  and  has  arrived  in 
safety at the time when the contract is concluded, the premium is not returnable unless, at such time, 
the insurer knew of the safe arrival; 

(c) where the assured has no insurable interest throughout the currency of the risk the premium is 

returnable, provided that the rule does not apply to a policy effected by way of wagering; 

(d) where the assured has a defeasible interest which is terminated during the currency of the risk, 

the premium is not returnable; 

(e)  where  the  assured  has  over-insured  under  an  unvalued  policy,  a  proportionate  part  of  the 

premium is returnable; 

(f) subject to the foregoing provisions, where the assured has over-insured by double insurance, a 

proportionate part of the several premiums is returnable: 

Provided that, if the policies are effected at different times, and any earlier policy has at any time 
borne  the  entire  risk,  or  if  a  claim  has  been  paid  on  the  policy  in  respect  of  the  full  sum  insured 
thereby, no premium is returnable in respect of that policy, and when the double insurance is effected 
knowingly by the assured no premium is returnable. 

SUPPLEMENTAL 

85. Ratification by assured.—Where a contract of marine insurance is in good faith effected by one 
person on behalf of another, the person on whose behalf it is effected may ratify the contract even after he 
is aware of a loss. 

86.  Implied  obligation  varied  by  agreement  or  usage.—(1)  Where  any  right,  duty,  or  liability 
would arise under a contract of marine insurance by implication of law, it may be negatived or varied by 
express agreement, or by usage, if the usage be such as to bind both parties to the contract. 

(2) The  provisions  of  this section  extend  to  any  right,  duty,  or  liability  declared  by  this  Act  which 

may be lawfully modified by agreement. 

87.  Reasonable  time,  etc.,  a  question  of  fact.—Where  by  this  Act  any  reference  is  made  to 
reasonable  time,  reasonable  premium,  or  reasonable  diligence,  the  question  what  is  reasonable  is  a 
question of fact. 

88. Covering note as evidence.—Where there is a duly stamped policy, reference may be made, as 

heretofore, to the slip or covering note, in any legal proceeding. 

89. Power to apply Act with modifications, etc., in certain cases.—The Central Government may, 
by notification in the Official Gazette, direct that the provisions of this Act shall, in their application to 
contracts  of  marine  insurance  relating  to  any  class  of  ships  exclusively  used  in  inland  navigation,  be 
subject to such conditions, exceptions and modifications as it may specify in the notification. 

90.  Certain  provisions  to  override  Transfer  of  Property  Act,  1882.—Nothing  in  clause  (e)            
of  section  6  of  the  Transfer  of  Property  Act,  1882  (4  of  1882),  shall  affect  the  provisions  of             
sections 17, 52, 53 and 79. 

91.  Savings.—The  rules  of  law,  including  the  law  merchant,  which  applied  to  contracts  of  marine 
insurance immediately before the commencement of this Act, save in so far as they are inconsistent with 
the express provisions of this Act, shall continue to apply to contracts of marine insurance. 

92.  [Repeals.]  Rep.  by  the  Repealing  and  Amending  Act,  1974  (56  of  1978),  s.  2  and  the  First 

Schedule (w.e.f. 20-12-1974). 

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SCHEDULE 
FORM OF POLICY 
(See section 24) 

BE  IT  KNOWN  THAT………..….…….…..as  well  in……..……………own  name  as  for  and  in  the  name  
and  names  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  kind  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 is master for this present voyage…………………or 
whosoever  else  shall  go  for  master  in  the  said  ship  or  by  whatsoever  other  name  or  names  the  said       
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, 
etc…………………………and so shall 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  whatsoever  shall  be  arrived  at……………….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  ports  or  places  whatsoever  without  prejudice        
to  this  insurance.  The  said  ship,  etc.,  goods  and  merchandises,  etc.,  for  so  much  as  concerned  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 contended to bear, and do take upon us 
in this voyage; they are of the seas, men of war, fire, enemies, pirates, rovers, thieves, jettisons, letter of 
mart and countermart, surprisals, takings 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 
other perils, losses, and misfortunes that have or shall come to the hurt, detriment, or damage of the said 
goods and merchandises, and ship, 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, labour, and travel for, in and about the defence, safeguards 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 especially declared and agreed that no acts of the insurer or insured in recovering, saving, or 
preserving the property insured shall be considered as a waiver, or acceptance of abandonment. And so 
we, the assurers, are contended, 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 into us for this assurance by 
the assured, at and after the rate of……………… 

In witness whereof we, the assurers, have subscribed our names and sums assured in………..... 

MEMORANDUM  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 per cent. and all other goods, also the ship and freight, are warranted free from 
average, under three per cent. unless general, or the ship be stranded. 

RULES FOR CONSTRUCTION OF POLICY 

The following  are  the  rules  referred  to  by  this  Act  for  the  construction  of  a  policy  in  the  above  or 

other like form, where the context does not otherwise require:— 

1. Lost and not lost.—Where the subject-matter is insured “lost or not lost” and the loss has occurred 
before the contract is concluded, the risk attaches unless, at such time the assured was aware of the loss, 
and the insurer was not. 

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2. From.—Where the subject-matter is insured “from” a particular place, the risk does not attach until 

the ship starts on the voyage insured. 

3. At and from.—(a) Where a ship is insured “at and from” a particular place, and she is at that place 

in good safety when the contract is concluded, the risk attaches immediately. 

(b) If she be not at that place when the contract is concluded, the risk attaches as soon as she arrives 
there  in  good  safety,  and,  unless  the  policy  otherwise  provides,  it  is  immaterial  that  she  is  covered  by 
another policy for a specified time after arrival. 

(c) Where chartered freight is insured “at and from” a particular place, and the ship is at that place in 
good safety when the contract is concluded, the risk attaches immediately. If she be not there when the 
contract is concluded, the risk attaches as soon as she arrives there in good safety. 

(d) Where freight, other than chartered freight, is payable without special conditions and is insured “at 
and from” a particular place, the risk attaches pro rata as the goods or merchandise are shipped; provided 
that  if  there  be  cargo  in  readiness  which  belongs  to  the  ship-owner,  or  which  some  other  person  has 
contracted with him to ship, the risk attaches as soon as the ship is ready to receive such cargo. 

4.  From  the  loading  thereof.—Where  goods  or  other  movables  are  insured  “from  the  loading 
thereof”, the risk does not attach until such goods or movables are actually on board, and the insurer is not 
liable for them while in transit from the shore to the ship. 

5.  Safely  landed.—Where  the  risk  on  goods  or  other  movables  continues  until  they  are  “safely 
landed”, they must be landed in the customary  manner and within a reasonable time after arrival at the 
port of discharge, and if they are not so landed the risk ceases. 

6. Touch and stay.—In the absence of any further license or usage, the liberty to touch and stay “at 
any port or place whatsoever” does not authorise the ship to depart from the course of her voyage from 
the port of departure to the port of destination. 

7. Perils of the seas.—The term “perils of the seas” refers only to fortuitous accidents or casualties of 

the seas. It does not include the ordinary action of the winds and waves. 

8. Pirates.—The term “pirates” includes passengers who mutiny and rioters who attack the ship from 

the shore. 

9. Thieves.—The term “thieves” does not cover clandestine theft or a theft committed by any one of 

the ship’s company, whether crew or passengers. 

10. Restraint of Princes.—The term “arrests, etc., of kings, princes, and people” refers to political or 

executive acts, and does not include a loss caused by riot or by ordinary judicial process. 

11. Barratry.—The term “barratry” includes every wrongful act wilfully committed by the master of 

crew to the prejudice of the owner, or, as the case may be, the charterer. 

12.  All  other  perils.—The  term  “all  other  perils”  includes  only  perils  similar  in  kind  to  the  perils 

specifically mentioned in the policy. 

13.  Average  unless  general.—The  term  “average  unless  general”  means  a  partial  loss  of  the    

subject-matter insured other than a general average loss, and does not include “particular charges”. 

14. Stranded.—Where the ship has stranded, the insurer is liable for the excepted losses although the 
loss is not attributable to the stranding, provided that when the standing takes place the risk has attached 
and, if the policy be on goods, that the damaged goods are on board. 

15.  Ship.—The  term  “ship”  includes  the  hull,  material  and  outfit,  stores  and  provisions  for  the 
officers and crew, and, in the case of vessels engaged in a special trade, the ordinary fittings requisite for 
the  trade,  and  also,  in  the  case  of  a  steamship,  the  machinery,  boilers,  and  coals  and  engine  stores,  if 
owned by the assured and also in the case of a ship driven by power other than steam, the machinery and 
fuels and engine stores, if owned by the assured. 

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16. Freight.—The term “freight” includes the profit derivable by a ship-owner from the employment 
of his ship to carry his own goods or movables as well as freight payable by a  third party, but does not 
include passage money. 

17.  Goods.—The  term  “goods”  means  goods  in  the  nature  of  merchandise,  and  does  not  include 

personal effects or provisions and stores for use on board. 

In  the  absence  of  any  usage  to  the  contrary,  deck  cargo  and  living  animals  must  be  insured 

specifically, and not under the general denomination of goods. 

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