|
5. Assignment of a policy
An insurance policy is a negotiable instrument and as such can be assigned by endorsement followed by delivery.34 It is in this way the seller, who is the assured under the insurance policy and must have an interest on the goods,35 will transfer to the buyer the policy demanded by a cif contract. The assignment of a policy can take place either before or after a loss.36 Once it is assigned, the assignee acquires all the rights of the assignor and is liable for all equities, claims and defences that a third party may have had against the assignor pertaining to the policy.37
6. Proximate cause
Under the Act, the insurer’s liability is for any loss proximately caused by a peril insured against.38 The idea of proximate cause has plagued cases of both marine insurance and carriage of goods by sea. In Leyland Shipping Co case,39 Lord Shaw stressed that where causes combine, the ‘proximate’ cause is not the latest in time, but ‘that which is proximate in efficiency’. Lord Wright’s speech in Smith Hogg 40 suggested that the doctrine of causation does mean different things in marine insurance and carriage of goods by sea. In carriage cases it is enough, in order to hold a carrier liable, that his act or default has been one contributing cause, among the web of causes out of which a loss, or damage, has emerged. In insurance cases, the insurer is liable if the insured peril is the principal, dominant, in short proximate cause, rather than one among several.
Under the Act, the insurer is not liable for the loss proximately caused by delay, ordinary wear and tear, ordinary leakage and breakage, inherent vice or nature of the goods insured, or for any loss proximately caused by rats or vermin. 41
7. Categories of losses
There are two types of losses under the Act, namely total loss and partial loss. The total loss is further divided into the actual total loss and the constructive total loss.42 A partial loss is associated with the term particular average loss which is distinguished from a general average loss. The insurance policy may relate to either or both types of loss. But the general average loss is deemed as uninsurable interest under the Act.43 The principal difference between the two types of loss is that the assured must give a notice of abandonment if he wishes to claim for a constructive total loss. Upon a valid abandonment, the insurer takes over the interest of the assured. Where no notice of abandonment need be given, it is possible for a constructive total loss to become an actual total loss, which does not require the giving of a notice of abandonment.
8. Indemnity
In marine insurance, the measure of indemnity is a matter of agreement between the insurer and the assured. The measure of indemnity is the value stated upon a valued policy and the full extent of the insurable value upon an unvalued policy where there has been a total loss of the subject matter. Where there has been a partial loss of a ship, the computation is different dependenting on the damage of the ship, the loss of freight, the loss of the goods or other movables. 44
9. Suing and Labouring Clause
Suing and labouring clause concluded in an insurance policy forms separate coverage in the insurance policy and is supplementary to the insurer to pay for the damage to the subject matter.45 Under the clause when the ‘assureds, their factors, servants and assigns’ sue and labour for averting and minimising a loss to the subject matter from a risk covered by the policy, the insurer is liable to indemnify any expenses incurred by them. Under the total loss of the subject matter and the exempting the insurer for partial loss, the insurer’s liability for suing and labouring remains unaffected. But the clause only applies to perils insured against and the measure taken necessarily for averting or minimising a loss. General average losses and contributions and salvage charges and any expenses incurred out of the insurance policy shall be exceptions of the clause.
|
