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Marine Insurance

Act 1906

The Marine Insurance Act 1906 (8 Edw. 7


c.41) is a UK Act of Parliament regulating
marine insurance. The Act applies both to
"ship & cargo" marine insurance, and to P&I
cover.
Marine Insurance Act 1906

Parliament of the United Kingdom

Long title An Act to codify the


Law relating to Marine
Insurance.

Citation 8 Edw. 7 c.41

Text of the Marine Insurance Act 1906 as in


force today (including any amendments)
within the United Kingdom, from
legislation.gov.uk.

The Act was drafted by Sir Mackenzie


Dalzell Chalmers, who had earlier drafted
the Sale of Goods Act 1893. The Act is a
codifying act, that is to say, it attempts to
collate existing common law and present
it in a statutory (i.e. “codified”) form. In the
event, the Act did more than merely codify
the law, and some new elements were
introduced in 1906. The Marine Insurance
Act 1906 has been highly influential, as it
governs not merely English Law, but it also
dominates marine insurance worldwide
through its wholesale adoption by other
jurisdictions.

Two modern statutes, the Consumer


Insurance (Disclosure and
Representations) Act 2012 (“CIDRA”) and
the Insurance Act 2015 have made
amendments to the law of insurance.

Overview
The most important sections of this Act
include:

s.4: a policy without insurable interest is


void.
s.17: imposes a duty on the insured of
uberrimae fides (as opposed to caveat
emptor); ie. that questions must be
answered honestly and the risk not
misrepresented.
s.18: the proposer of the insurer has a
duty to disclose all material facts
relevant to the acceptance and rating of
the risk. Failure to do so is known as
non-disclosure or concealment (there are
minor differences in the two terms) and
renders the insurance voidable by the
insurer.
s.33(3): If [a warranty] be not [exactly]
complied with, then, subject to any
express provision in the policy, the insurer
is discharged from liability as from the
date of the breach of warranty, but
without prejudice to any liability incurred
by him before that date.
s.34(2): where a warranty has been
broken, it is no defence to the insured
that the breach has been remedied, and
the warranty complied with, prior to the
loss.
s.34(3): a breach of warranty may be
waived by the insurer.
s.50: a policy may be assigned.
Typically, a shipowner might assign the
benefit of a policy to the ship-mortgagor.
ss.60-63: deals with the issues of a
constructive total loss. The insured can,
by notice, claim for a constructive total
loss with the insurer becoming entitled
to the ship or cargo if it should later turn
up. (By contrast an actual total loss
describes the physical destruction of a
vessel or cargo.)
s.79: deals with subrogation; ie. the
rights of the insurer to stand in the
shoes of an indemnified insured and
recover salvage for his own benefit.

Schedule 1 of the Act contains a list of


definitions; schedule 2 contains the model
policy wording.

Reform
Two new statutes, the Consumer
Insurance (Disclosure and
Representations) Act 2012 (“CIDRA”) and
the Insurance Act 2015 have addressed
insurance in general, and have amended
the law in several ways.
Part 5 of the Insurance Act 2015
addresses "Good faith" as follows:

Section 14 provides that "any rule of law


permitting a party to a contract of
insurance to avoid the contract on the
ground that utmost good faith has not
been observed by the other party is
abolished.
Accordingly, s,14(3) amends s.17 of the
Marine Insurance Act 1906 to read: "A
contract of marine insurance is a
contract based upon the utmost good
faith" and that section's subsequent
words: "and, if the utmost good faith be
not observed by either party, the
contract may be avoided by the other
party" are now omitted.

See also
Airmic
UK commercial law
Marine insurance
Seaworthiness (law)

Notes

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Last edited 5 months ago by DuncanHill

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