ADJUSTMENT, in marine insurance, is the settling and ascertaining the exact amount of indemnity which the party insured is entitled to receive under the policy, after all proper allowances and deductions have been made ; and fixing the proportion of that indemnity which each underwriter is liable to bear. The contract of insurance is an agreement to indemnify the insured against such losses as he may sustain by the occurrence of any of the events which are expressly, or by implication of law, contained in the policy. Thus, when a ship is lost, or any of those contingencies arise against which the insurance provides, the owner of the ship or of the goods insured, as the case may be, or an authorized agent, reports the circumstance to the insurers or under writers. In London, this notice is given by an insertion in a book kept at Lloyd's Coffee-House in the subscription-rooms, where the greater part of marine in surances are effected.
Before any adjustment is made, the underwriters require to be informed of all particulars, that they may be satisfied the loss has occurred through circumstances against which the insurance was effected. In ordinary cases the task of ascertaining these facts, and of examining the correct ness of the demand made by the assured, rests with the underwriter who has first subscribed the policy. In complicated cases of partial or average losses, the papers are usually referred to some disin terested party, whose business it is to un dertake such references, to calculate and adjust the per centage rate of loss. Where the ship is wholly lost, of course little difficulty occurs in this part of the in quiry; but in cases of partial losses, where the insured has not exercised his right of abandonment very minute and careful examination o en be comes necessary. The quantity of damage
being ascertained, the amount which each underwriter has made himself liable to by subscribing the policy is settled ; and this being done, it is usual for one of the underwriters, or their agent, to indorse on the policy, "adjusted a partial loss on this policy of so much per cent." To this indorsement the signature of each under writer must be affixed, and this process is called the adjustment of the loss.
After an adjustment has been made, it is not usual in mercantile practice for the underwriter to require any further proof, but at once to pay the loss ; and it has been said that the reason for which ad justments have been introduced into the business of maritime insurance is, that upon the underwriter signing an adjust ment, and thereby declaring his liability, and admitting that the whole transaction is adjusted, time should be given him to pay the money. As a question of law, however, it is undecided how far the ad justment is conclusive and binding upon the underwriters ; the better opinion ap pears to be that the adjustment is merely presumptive evidence against an insurer, and has only the effect of transferring the burden of proof from the assured to the underwriters ; that is, where an adjust ment has taken place, and the liability to pay the loss is disputed, the adjustment alone, without further proof, will be suffi cient to entitle the insured to recover in an action on the policy, unless the under writer shows facts which may have the effect of relieving him from liability. (Selwyn's Nisi Pries, title " Insurance;" Park, on the Lazo of Marine insurance, and a note to Campbell's Nisi Pries Re ports, vol. i. p. 276.)