Report No. 67

6.31. Section 4 of the 1963 Act-Form of policy.-

The Act contains, in a schedule, the standard form of policy which may be used. This is based on the Lloyd's policy. Section 4 of the Act provides-

"(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 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."

6.32 Sections 25-26, Marine Insurance Act.-

Some of the other important provision of the Act are in sections 25-26.1

Section 25 enacts what a marine policy must specify.

Section 26(1) provides that a marine policy must be signed by or on behalf of the insurer.

1. Sections 25-26, Marine Insurance Act, 1963.

6.33. So much as regards the important provisions contained in the body of the Marine Insurance Act. The Schedule to the Act contains the form of the policy. Its use is permissible, not mandatory.

6.34. Usual Policy-S.G. Form.-

It may be of interest to refer to history of the policy of marine insurance. The form of policy usually employed in marine insurance is generally known as the S.G. Form.1 The words "S.G." mean "ship-goods" indicating that the policy is adapted for the insurance of any interest which is not itself a tangible physical object, as long as such interest is pecuniary.2

Sir Douglas Owan, an authority on marine insurance in the nineteenth century, said of the Lloyd's policy-'almost every clause is consecrated by centuries of usage'. Though the policy is clumsily expressed, its meaning is clear, because it has 'generations of legal interpretation hanging almost to every word, and almost certainly to every sentence'. As the Marry at Committee of 1811 reported, the 'doubtful points have been so repeatedly discussed and decided upon in Courts of law that their true legal import is ascertained.'

1. Ship and Goods Form.

2. Dover Analysis of Marine Insurance Clauses, (1961), p. 4.

6.35. Lloyd's policy.-

It may be stated that Lloyd's policy was settled in its present form in 1779, and some of the provisions are even of much older date.1 Though, in the beginning, the English Judges described it as strange instrument, the mercantile community has clung to it, and, in fact, all English insurance law has been developed through cases arising on the policy. This policy appears as a schedule to our Marine Insurance Act also, as already stated.

1. Raynes History of British Insurance, (1964), p. 159.

6.36. Other standard clauses.-

Besides, the standard form of policy, certain clauses are added, where required by the circumstances of the case, in a marine insurance policy. Even in such cases, standard forms evolved by Institutes are in force, such as, the Institute of London Underwriters Clauses, the American Institute Cargo Clauses, and what have come to be known as the "York-Antwerp Rules", which represent a code for voluntary adoption in contracts of affreightment to govern general average loss and contribution.

6.37. These clauses are also of great practical importance, and many of them have come up for construction before English Courts during the last 150 years. Reference may be made, in this Connection, to a lecture to the Insurance Institute of London, delivered by Lord Chorley in November, 1957.1 Lord Chorley said-

"If the Institute Clauses are the core of modern insurance, their construction is the wrapping, round the core, and without dealing with the wrapping, that is, without construction, we cannot get at the core."

1. Lord Chorley, Lecture on The Construction of the Marine Policy.

6.38. The classic exposition of this important matter is contained in a lecture delivered by Sir Patrick Devlin,1 (when he was a Judge of the High Court of Justice) to the Norwegian Maritime Law Association on 4th July, 1952.

1. Devlin The Principles of Constructions of Charter Parties, Bills of Lading and Marine Policies-Address to the Norwegian Maritime Law Association, (1952).

6.39. Various types of policies-Time Voyage, Mixed Floating Valued and Unvalued.-

It may be stated that marine policies are of many kinds1-

(1) for a voyage, i.e. where the contract is to issue the subject-matter "at and from" or "From one place to another or others"

(2) For time, i.e., where the contract is to insure the subject-matter for a definite period of time.

(3) For Voyage and for time (Mixed).-In this case the loss is covered only on a particular voyage and the loss must also occur within that time specified.

(4) A floating policy.-This describes the insurance in general terms, but leaves the name of the ship or ships and other particulars to be specified later.

(5) A valued policy.-This specifies the agreed value of the subject-matter, and the value so fixed is, as between the insurer and the assured, conclusive of the value of the subject-matter insured.

(6) An unvalued or open policy.-This does not specify the value of the subject-matter, but, subject to the limit of the sum assured, leaves it to be subsequently determined.

1. Based on Smith Mercantile Law, and Stevens Mercantile Law.

6.40. Definition in the Stamp Act, section 2(2).-

Reverting, now, to the Stamp Act, we may note that the definition of "policy of insurance" in the Act is based on section 92, Stamp Act, 1891 (English) as it then stood. It may, however, be stated that since 1959,1 there is, in England, no separate stamp duty on policies of marine insurance and these policies share the fixed duty of 6 pence in common with all policies of insurance except life insurance. In fact section 92 of the English Act of 1891 and succeeding provisions were repealed in 1959.

1. Section 30, Finance Act, 1959 (English).