Report No. 21
Departure from English Act
This defines a "contract of marine insurance". The following points may be noted:
1. This definition stresses three elements, viz. (i) indemnity, (ii) marine losses, and (iii) insurance "in the manner and to the extent agreed".
Indemnity.-The rule that insurance is a contract of indemnity can be said to be an unbroken thread which runs through the Marine Insurance Act from the beginning to the end. This rule has its positive as well as negative aspects. By its positive aspect, what is meant is that the assured must be enabled to recover the full loss (within the limits of the policy). Section 77(1) of the English Act, under which successive losses can be recovered, is an illustration of the positive aspect; because, under that section, the insurer is liable for successive losses even though the total amount of such losses may exceed the sum insured. Section 84 of the English Act, enabling the assured to return of the premium, also provides illustration of the indemnity aspect; see section 84(3)(b), (c), (d), etc.
The negative aspect of the indemnity is amply illustrated by section 33 (over-insurance), section 61 (effect of constructive total loss), section 67 (measure of indemnity), and section 77(2) (merger of partial loss in a subsequent total loss); and section 79 (subrogation) and section 80 (contribution between co-insurers) emphasise the indemnity element beyond any doubt.
2. An elaborate definition of "marine aviation and transit insurance" has been given in the (English) Assurance Companies Act, 1946.1 It need not be considered, since it does not define marine insurance as a concept, but merely enumerates the various properties which can be insured. The definition of "marine insurance business" in section 2 (13A), (Indian) Insurance Act, 1938 (4 of 1938) also merely enumerates the various interests which can be insured.
3. The definition in the (English) Stamp Act,2 1891, section 92 and the Indian Stamp Act, 1899, section 2(20) may be compared. The definition of "policy of sea-insurance" in section 2(20) of the Indian Stamp Act is wide enough to cover any insurance made upon any ship or vessel, whether for marine or inland navigation. The definition adopted in the clause under discussion (which follows section 1 of the English Act) stresses the concept of "marine losses" and "marine adventures"; but, as expressly provided elsewhere,3 a contract of marine insurance may, by express terms or usage, 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.
Since the primary concept of marine insurance is concerned with the sea and not with inland waters, it has been considered desirable not to refer expressly to inland navigation in the definition. There is nothing to prevent an insurer from utilizing the marine insurance policy for inland navigation. In fact, the form is capable of being used with suitable modifications for insurance in respect of other modes of transport. A statute on marine insurance, however, must primarily confine itself to marine adventures.
4. The word "assured" has been used in the definition, instead of "insured". The expressions do not appear to have different meanings.
5. "Premium" has not been mentioned in the definition, because of section 85 of the English Act relating to mutual insurance, whereby a guarantee etc. may be substituted for premium.
Departure from the English Act.-In the opening portion the word "agreement" has been used instead of "contract" appearing in the English Act. The Indian Contract Act makes a distinction between the two. It is only an agreement which is enforceable by law which is a contract. In consonance with that distinction, "agreement" is preferable.
1. 9 and 10 Geo. 6, Ch. 28.
2. 54 and 55 Vict., c. 39.
3. See clause 4.