Report No. 21
General.-This deals with return of premium for failure of consideration.
Apportionment of return.-Sub-section (2) provides that where the consideration for the payment of premium is apportionable, and an apportionable part of the consideration totally fails, then a proportion of the premium is returnable. Time policies, it is stated,1 would not come under this provision because the period of time is non-apportionable and if the risk does not continue for the whole of the period of the policy, no return can he claimed.
Particular cases.-Sub-section (3) deals with particular cases where return for failure of consideration would apply:
Para. (a)-deals with the policy being void or being avoided by the insurer. As to avoiding the policy, see section 18 (1) (non-disclosure by the assured), section 20(1) (untrue representation by the assured) etc.
Para. (b)-deals with the cases where the subject-matter has never been imperilled.
"Lost or not lost".-The proviso deals with "lost or not lost" clause.1 If the insurer knew of the safe arrival of the ship, then, notwithstanding "lost or not lost" clause, he must return the premium, because so far as he was concerned there was no risk.
Para. (c)-deals with the case where the assured had no insurable interest. As to insurable interest, see section 5 and the succeeding sections of the English Act. There is, however, no return of premium if the policy is effected by way of gaming or wagering. As to gaming or wagering policies, see section 4 (2) of the English Act. The important words are "no insurable interest throughout the currency of the risk", so that where, though the assured had no interest in the beginning, still he acquires it later, and had an expectation of acquiring it when the policy was effected,3 he can claim return of premium.
Para. (d)-deals with a case where an assured had a defeasible interest which is terminated during the currency of the risk; the premium is not returnable in such case. As to "defeasible" interest, see section 7(1) of the English Act.
Paras. (e) and (f)-deal with over-insurance. The distinction between (e) and (f) is, that while (e) deals with over-insurance simply, (f) deals with over-insurance by double-insurance. Further, (e) is confined to unvalued policies, while (f) applies to all policies. Next, (e) contemplates a single policy (contrast the singular word "premium" used there with, the plural word "premiums" used in (f). Under para, (e), where the sum for which the subject-matter is insured exceeds the insurable value, there is over-insurance and a proportion of the premium is returnable if the policy is unvalued.
Para. (f) deals with cases where more than one policy is taken out, resulting in over-insurance by double-insurance. The topic of such over-insurance is dealt with in section 32 (as between the insurer and the assured) and section 80 (contribution as between co-insurers). Where there is such over-insurance, a proportion of the several premium is returnable, subject to the proviso given below the section.
1. Dover, p. 455.
2. Cf. section 6(1), proviso and First Schedule, Rule 1, of the English Act-clause 10 and Schedule, Rule 1.
3. See section 4(2)(a), English Act.