|
2. Uberrimae fide
All insurance policies, whether marine, life, fire or accident, require the observance of uberrimae fide, the utmost good faith, on both the insurer and the assured. The breach of the utmost good faith may cause the insurance contract to be void ab initio.24 Especially, uberrimae fidei requires the highest degree of good faith.25 The duty to disclose any material fact under the utmost good faith applies equally to the two parties’agents.26 A failure by any party’s agent to disclose any material fact would amount to a failure to observe the utmost good faith giving the other party an option to avoid the contract.
Under the Act, the assured is presumably deemed to know every material fact in relation to the risk, which he ought to know in the ordinary course of trade. And the assured must inform the insurer every material fact prior to the making of the contract.27 What constitutes a material fact is a question of fact depending on whether that circumstance ‘would influence the judgment of a prudent insurer in fixing the premium, or determining whether he will take the risk’.28
The position in respect of positive representations by the assured is much the same as that in respect of disclosure. The Act requires that material representations made before the contract is concluded must be substantially true; otherwise the insurer will be entitled to avoid the contract. Representation includes matters of fact and a matter of expectation or belief which is deemed to be true if made in good faith.29
3. Policy of insurance
A policy of insurance is a fundamental element to the marine insurance contract. It must be issued in the standard form provided in the schedule to the Act to make harmonization of the marine insurance in the world. At the same time, the policy must identify the certainty of the subject matter insured under the Act. The ports of loading and discharge will normally be specified in the policy. Any change will lead that the insurance never comes into effect. According to the subject matter insured, the statute classifies six types of policies. These are voyage policy, time policy, mixed policy, floating policy, valued policy and unvalued policy.30
4. Warranties
The Marine Insurance Act contains a number of warranties each of which is a promissory warranty and must be complied with strictly. If a breach of warranty happened, the insurer will be discharged from all liability in respect of losses occurring after the date of such breach and it is immaterial that the breach was later remedied and the warranty complied with before the loss occurred.31 However, it will not terminate the contractual obligation ab initio. Certain other obligations under the contract will keep on.32
The effect of a breach of warranty arose in The Good Luck.33 The insured vessel became a constructive total loss after being hit by a missile while it was, in breach of warranty, in a dangerous area. The defendant insurers had apparently been aware of such breaches but had taken no action. The plaintiff bank had lent money to the shipowner in the belief that the vessel was insured. In the situation, the House of Lords, reversing the decision of the Court of Appeal, held that a breach of a promissory warranty did not automatically terminate the contract. It merely discharged the insurer from liabilities in relation to the underwriting of the risk, any other obligations remaining valid and binding. The insurer had breached its undertaking to inform the bank ‘promptly’ and, therefore, the insurer was liable under the contract of the insurance.
Warranty may be express or implied. An express warranty must be in writing in the policy. Warranties as to nationality and neutrality and those warranties regarding the ship itself are perhaps the most common. There are certain general implied warranties, such as the warranty that the adventure is legal and, the ship will be seaworthy.
|
