1. What ‘constitutes’ a Marine Adventure.
Introduction.
There can be no international trade without shipping. Carriage of goods by sea will
always be the cheapest mode of international transport. Marine insurance is an
integral part of shipping and international trade. The contract of marine insurance take
place when the insurer agree to indemnify the assured against loss occasioned by
perils incident to a marine adventure for a sum of money referred to as the premium.
Section 1 of the Marine Insurance Act 1906.
A contract insurance is a contract whereby the insurer undertakers to indemnify the
insured in manner and to the extent thereby agreed, against marine losses, that is to
say, the losses incident to marine adventure.
Marine insurance is grouped either under hull and machinery or cargo. In fact, the
history of marine underwriting for both groups could be traced back to sometime in
the fourteenth century.
Insurable interest defined.
The 1906 Act defines insurable interest as where a person stands “in any legal or
equitablerelation 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 itsloss, or damage thereto, or by the detention
thereof, or may incur liability in respect thereof”. In other words, a person who may
suffer financial loss from an event has an insurable interest in the property or interest
which is insured against that event. The event must create upon the insured a
commercial loss or liability, or it must affect a right of the insured which is recognised
and protected by the courts. A person will therefore have an insurable interest in
property in its possession but cannot have an insurable interest in its debtor’s property
unless a lien or similar right attaches to it. Neither can a person have an insurable
interest against an event if it does not seek directly to protect the right to which it is
legally entitled. Thus a parent company has an insurable interest in the shares of its
subsidiary but not in the underlying assets or profits of that company. A contract
without insurable interest is null and void for all purposes, though in practice void
contracts are often performed as if they had full legal effect.