Disclosures and representations.—A contract of marine insurance is a contract based upon the utmost good faith, so that if the utmost good faith is not observed by either party, the contract may be avoided by the other party. The assured is therefore bound to disclose to the underwriter, before the contract is concluded, every " material " circumstance which is known to him ; and, moreover, the law will presume that he knew every circumstance which, in the ordinary course of business, ought to be known by him. Should he fail to make such disclosure the under writer is entitled to avoid the contract. It may be taken as a rule that every circumstance is material which would influence the judgment of a prudent underwriter in fixing the premium, or determining whether he will take the risk, the term "circumstance" including any communication made to, or information received by, the assured. But whether any particular circumstance which is not disclosed is material or not, will, in each case, be a question of fact. In the absence of inquiry, however, the following circumstances need not be disclosed : (a) A circumstance which diminishes the risk ; (b) one which is known or presumed to be known to the underwriter —the latter being always presumed to know matters of common notoriety or knowledge, and matters which an underwriter in the ordinary course of his business, as such, ought to know; (e) a circumstance as to which information is wanted by the underwriter ; and (d) one which it is superfluous to disclose by reason of any express or implied warranty. In this connection Mr. Gow may profitably be quoted again. "When a merchant, shipowner, or broker offers a risk for insurance, his object, shown by the very fact of his making the offer, is to transfer from himself to the underwriter, in re turn for a premium to be paid and received, the risk in question. In making the offer be gives certain details, which may be classed under three categories—the unfavourable, the customary, the favourable. The unfavourable . . . he is bound to disclose; the customary he is entitled to pass over, as the underwriter is considered bound to know them ; only the favourable remain. An underwriter is therefore entitled to assume that a would-be assured tells him the unfavourable facts because he dare not conceal them without imperilling his insurance, passes over the customary because he need not detail them, and expounds the favourable because he desires to do so. If that is true of the information volunteered by the intending assured, it is doubly true of the content of replies made by him to questions put by the underwriter . . . It seems, therefore, enough for general practical purposes to say that (so long as it is borne in mind that a representation is fulfilled by substantial compliance) misrepresentation occurs in any information volunteered or given in reply to inquiry, when ever any statement inPde is not substantially correct, provided it might fairly be held to affect an underwriter's opinion of a risk or of the proper premium for it. A man is entitled to say he has no information if he really has none : it will then be open for the other side to ask him to get the information required; but a man is not entitled to invent information if he has it not, or to colour, improve, or adorn what he has." Subject to the above-mentioned exceptions to the necessity for disclosure, where an in surance is effected for the assured by an agent, the latter must disclose to the underwriter—(a) every material circumstance which is within his own knowledge, an agent to insure being deemed to know every circumstance which, in the ordinary course of business ought to be known by, or to have been communicated to him ; and (b) every material circumstance which the assured is bound to disclose, unless it comes to his knowledge too late to communicate it to the agent. And, moreover, every material representa tion must be true vvhen made to the underwriter, during the negotiations for the contract before the contract is concluded, and whether made by the assured himself or by his agent. If it is untrue the underwriter may avoid the contract. It will be a " material" representation if it is calculated to influence the judgment of a prudent underwriter in fixing the premium or determining whether he will take the risk. It will be a representation equally whether it goes to a matter of expectation or belief as to a matter of fa.ct ; but it can always be withdrawn or corrected before the contract is concluded. A representation of fact vvill be true if substantially correct, that is to say, if the difference between vvhat is represented and what is actually correct would not be considered material by a prudent underwriter. And in this connection it is useful to note the distinction between a warranty and a representation as made in De Ilahne v. Ilartley. In that case Lord Alansfleld said, " A representation may be equitably and substantially answered, but a warranty must be strictly cotnplied with." The assured or his agent is not bound to give his opinion to the underwriter on any matter relating to the adventure. A contract of marine insurance is considered to be concluded when the proposal of the assured is accepted by the underwriter, whether the policy is then issued or not ; and in order to show whether the proposal was accepted, reference can be made to the slip or covering note or other customary memorandum of the contract, even though it is =stamped.
Double and multiple insurance. — An assured is said to be over insured by double insurance where two or more policies are effected on his behalf on the same adventure and interest or any part thereof, and the sunis insured exceed a lawful indemnity. Under such circumstances, unless the policy otherwise provides, he can claim payment from the underwriters in such order as he niav choose, but he cannot recover any sum in excess of the lawful indemnity. Thus, in Davis v. Gildart, where a merchant insured his interest of the value of ..L)29.00, first with a Liverpool underwriter for 11700, and afterwards in London for L'24-200, the Court held that the London under writer was liable to the merchant for the v.-hole of the .122200; but the London underwriter had a right of contribution against the one in Liverpool. And
where the policy under which an assured claims is a valued policy, he must give credit as against the valuation for any sum received by him under any other policy without regard to the actual value of the subject-matter insured. If his claini is upon an unvalued policy, then he must give credit, as against the full insurable value, for any sum received by him under any other policy. Any sum received by him in excess of the lawful indeninity is to be held by him in trust for the underwriters, according to their right of contribution among themselves. " The cases of multiple insurance that most generally occur," writes Mr. Gow, "are those in which buyer and seller, shipper and consignee, or others in similar relationship, have each insured the same goods or interest without knowing that the other has done the same. If the fact of double insurance becomes known before the lapse of the risk insured, the best course to adopt is to advise both sets of underwriters of the fact, to ask each of them to reduce his amount insured by one-half and to return one half of the premium. If, on the other hand, both insurances are effected by the same person, and without fraudulent intention and not in sheer forget fulness, it is only fair to assume that he had some reason for effecting the additional policy (such as dissatisfaction with the security of his first policy), and there does not appear to be any fair ground for claiming return of premium, although the final incidence of the claim is the same." The the subject-matter is insured by a voyage policy "at and from " or "from " a particular place, it is not necessary that the ship should be at that place when the contract is concluded. There is, how ever, an implied condition that the adventure shall be commenced within a reasonable time after the conclusion of the contract, and that if the adven ture is not so commenced the underwriter may avoid the contract. But this implied condition can be negatived by showing that the delay was not an idle one, but caused by circumstances such as loading, known to the under writer before the contract was concluded, or by showing that he waived the condition. Undue delay is practically a deviation. Where the place of departure is specified by the policy, and the ship instead of sailing from that place sails from any other place, the risk does not attach. So, too, where, before the commencement of the risk, the destination of the ship is changed from the destination contemplated by the policy. There is said to be a "change of voyage " when, after the commencement of the risk, the destination of the ship is voluntarily changed from the destination contemplated by the policy. The consequence of a change of voyage, unless the policy otherwise provides, is to discharge the insurer from liability as from the time of change, that is to say, from the time when the determination to change it is manifested.
It is immaterial that the ship may not in fact have left the course of voyage contemplated by the policy when the loss occurs. Upon a ship deviating, without lawful excuse, from the voyage contemplated by the policy, the underwriter is discharged from liability as from the time of deviation, and it is immaterial that the ship may have regained her route before anv loss occurs. The result is that the continued validity of a cargo-owner's insurance is absolutely at the mercy of the master of the ship, and consequently in insurances of cargo it is usual to provide that the policy shall remain in force notwithstanding a change of voyage or deviation, subject to arrangement as to a further premium. A deviation may occur either—(a) where the course of the voyage is specifically designated by the policy, and that course is departed from ; or (b) where the course of the voyage is not specifically designated by the policy, but the usual and customary course is departed from. In deciding whether or no there has been a deviation it should be borne in mind that geographical terms, in this connection, are understood in their mercantile and broader meaning, and not in their exact and scientific meaning. Thus Mauritius has been included among the Indian Isles, and the Gulf of Finland has been taken to be within the Baltic Sea. Mercantile and maritime usage is the test, though, as a principle, a voyage should proceed "in a mathematical line " if possible. The intention to deviate is imma terial ; there must be a deviation in fact to enable the insurer to avoid the contract. Where several ports of discharge are specified by the policy, the ship may proceed to all or any of them, but, in the absence of any usage or sufficient cause to the contrary, she must proceed to them, or such of them as she goes to, in the order designated by the policy. If she does not there is a deviation. So also is there where the policy is to " ports of discharge," within a given area, which are not named, and the ship, without the sanction of wage or sufficient cause, proceeds to them, or such of them as she goes to, without regard to their geographical order. In the case of a voyage policy the adventure insured must be prosecuted, throughout its course, with reason able despatch ; and if without lawful excuse it is not so prosecuted, the in surer may avoid the contract as from the time when the delay became unreasonable. Either of the following sets of circumstances is an excuse for deviation or delay :—(a) Where it is authorised by any special term in the policy ; (b) where it is caused by circumstances beyond the control of the master and his employer ; (c) where it is reasonably necessary in order to comply with an express or implied warranty ; (d) where it is nece _nary for the safety of the ship or subject-matter insured ; (e) if it is to save human life, or aid a ship in distress where human life may be in danger ; (f) where reasonably necessary for the purpose of obtaining medical or surgical aid for any person on board the ship; or (g) where it is caused by the barratrous conduct of the master or crew, if barratry is one of the perils insured against. When, however, the cause excusing the deviation or delay ceases to operate, the ship must resume her course and prosecute her voyage with reasonable despatch.