contract of marine insurance, though based upon the principle of indemnity, is not in practice a perfect contract of indemnity. It may be defined as a contract whereby the insurer, who is usually called an "underwriter," undertakes to Indemnify the assured in the manner and to the extent thereby agreed, against marine losses, that is to say, the losses incident to marine adventure. Such a contract by its express terms or by the usage of trade, can be extended so as to protect the assured against losses on inland waters or on any land risk which may be incidental to a sea voyage. A ship in course of building, or the launch of a ship, or the conveyance abroad by post of securities, or any adventure analogous to a marine adventure, is capable of being covered by a policy in the form of a marine policy ; where this is the case the law specially relating to marine insurance is generally applicable thereto. Every lawful marine adventure may be the subject of a contract of marine insurance. There can, therefore, be no valid insurance of an adventure of an illegal character, such for example as slave trading, tra.flic with an enemy with which England is at war, home contraband trading or smuggling, or blockade running when this country is not neutral. Nor can there be a valid insurance of seamen's wages, or of an enetny's property against capture by English ships. In the words of Chief-Justice Tindal, "a policy on an illegal voyage cannot be enforced, for it would be singular if the original contract being invalid and therefore incapable to be enforced, a collateral contract founded upon it could be enforced." The following are instances of marine adventures :—(a) Where a ship, goods, or other movables are exposed to maritime perils, such property being referred to in this article as " insurable property "; (b) where the earning or acquisition of freight, passage nioney, commission, profit, or other pecuniary benefit, or the security for a loan, advances, or disbursements is endangered by the exposure of insurable property to maritime perils; (c) where a liability to a third party may be incurred by the owner of, or other person interested in or responsible for insurable property, by reason of its exposure to maritime perils. The term " movables" is here used as meaning any movable tangible property other than the ship, but including money, valuable securities, and other documents; and "freight" may be under stood as including the profit derivable by a shipowner from the employment of his ship to carry his own goods or movables, as well as freight payable by a third party, but not including passage money.
By " maritime perils" is meant the perils consequent on, or incidental to, the navigation of the sea; that is to say, perils of the seas, fire, war perils, pirates, rovers, thieves, captures, seizures, restraints, and detainments of princes and peoples, jettisons, barratry, and any other perils either of the like kind, or which may be designated by the policy. Of this catalogue some notice may be usefully taken of certain of the perils enumerated therein. The term perils of the seas does not, in the opinion of Lord Herschell, cover every accident or casualty which may happen to the subject-matter of the insurance on the sea. It must be a peril " of" the sea. "It is well settled, that it is not every loss or damage of which the sea is the immediate cause which is covered by these words. They do not protect, for example, against that natural and inevitable action which results in what may be described as wear and tear. There must be some casualty, something which could not be foreseen as one of the necessary incidents of the ad venture. The purpose of the policy is to secure an indemnity against accidents which may happen, not against events which must happen." Fire is always found in a policy as one of the perils against which the underwriters undertake to indemnify the assured. " If the ship be de stroyed by fire," said Lord Ellenborough, "it is of no consequence whether this is occasioned by a common accident, or by lightning, or by an act done in duty to the state." But underwriters on goods are not liable for any damage done to them by their spontaneous combustion ; though under writers on a ship would probably be liable for damage to the ship resulting from this cause. De Courcy says that spontaneous combustion is "a form of words employed to indicate a production of internal facts without known external agents. It is never certain that the combustion has been spon taneous." And on this Mr. Cow, in his admirable handbook on Marine Insurance, remarks that "as a matter of fact 'spontaneous' combustion is the cause which is assumed to have occasioned a fire w hen no other real cause can be proved to have existed."
Insurable interest.—A contract of marine insurance by way of gaming or wagering is void. It will be a gaming or wagering contract where—(a) the assured has no insurable interest, and the contract is entered into with no expectation of acquiring such an interest ; or (b) the policy is made " interest or no interest," or " without further proof of interest than the policy itself," or "without benefit of salvage to the insurer," or subject to ally other like term. But many policies which offended against the foregoing were effected before the Marine Insurance (Gambling Policies) Act, 1909 (for the provisions of which see the article GAMBLING POLICIES in the Appendix), though they were consequently null and void. They were known as " Honour " policies, and were always duly " honoured " by members of Lloyd's. Generally speaking, any one H ho is interested in a marine adventure has an insurable interest. A person is interested in such an adventure where he stands in a legal or equitable relation thereto, or to any in surable property or risk therein, in consequence of which he may benefit by the safety or due arrival of insurable property, or nuty be prejudiced by its loss or by damage to it, or by its detention, or may incur liability in respect thereof. But it must be observed that a mere prospect or possibility of loss or gain, which is not founded on any right or liability in, or it respect of the subject-matter insured, is not insurable. The owner of a ship chartered to another has an insurable interest in the whole value of the ship, notwithstanding that the charterer has also, at the same time, a like insurable interest. The reason for this is that the charterer is responsible for the ship to the owner, and the latter is not bound to rely exclusively upon the financial responsibility of the charterer. Mr. Justice Lawrence, in Lucena v. Craicfbrd, explained the nature of an insurable interest in the following words: "A man is interested in a thing to whom advantage may arise or prejudice happen from the cir cumstances which may attend it, and whom it importeth that its condition as to safety or other quality should continue. Interest does not necessarily imply a right to the whole or part of the thing, nor necessarily and ex clusively that which may be the subject of privation, but the having some relation to, or concern in, the subject of the insurance, which relation or concern by the happening of the perils insured against may be so effected as to produce the damage, detriment, or prejudice to the person insuring. . . . To be interested in the preservation of a thing is to be so circumstanced with respect to it as to have benefit from its existence, preju dice from its destruction. The property of the thing and the interest derived from it may be very different. Of the first the price is generally the mea sure, but by interest in a thing every benefit and advantage arising out of or depending on such thing may be considered as comprehended." As a rule the assured must be interested in the subject-matter insured at the time of the loss, though he need not be interested when the insurance is effected; but where the subject-matter is insured "lost or not lost," it is imma terial that the assured may not have acquired his interest until after his loss, if at the time of effecting the contract of insurance he was not aware of the loss. And if he has no interest at the time of the loss, he cannot acquire interest by any act or election after he is aware of the loss. It is a general practice to insure " lost or not lost," both underwriter and insurer thereby expressing indifference as to whether the subject-matter is then in existence or not. The practice is certainly very hazardous, because even if the ship or goods are lost at the time of the insurance the underwriter is liable, provided there is no fraud on the part of the assured. The premium, however, pro portionately depends upon the circumstances stated at the time to show the probability or otherwise of the ship's safety. And as there must be no fraud on the part of the assured, so there must be none on the part of the underwriter. The policy will be void as against the latter if he concealed as having insured a ship which he privately knew had arrived, and an action will lie to recover the premium. It is not an absolutely infrequent practice for insurances to be effected " lost or not lost" when both underwriter and assured are aware that the ship is at the time actually lost ; and this practice is perfectly legal.