POLICY. In Insurance. The instru ment whereby insurance is made by an un derwriter in favor of an assured, expressed, implied, or intended, against some risk, peril, or contingency in reference to some subject. It is usually either mariue, or against lire, or on a life.
It must show expressly, or by implication, in whose favor it is made. It may he upon a valu able property, interest, or contingency, or be a gEaming or wagering policy on a subject in which the assured has no interest, or against risks in respect to whioh the assured has no interest except what arises from the contract itself. A wagering policy is valid or not, according as a wager is or is not recognized as R valid contract by the lex loci.
An interest policy is one where the insured has a real, substantial, assignable interest in the thing insured.
An open policy is one on which thc value is to be proved by the assured. 1 Phillips, Ins. 4,6,7, 27, 439,948, 1178. By an " open policy" is also sometimes meant, in the United States, one in which au aggregate amount is ex pressed in the body of the policy, and the specific amounts and subjects are to be in dorsed from time to time. 12 La. Ann. 259; 19 N..Y. 305 ; 6 Gray, Mass. 214.
A valued policy is one where a value has been set on the ship or goods insured, and this value inserted in the policy in the nature of liquidated damages. In such a policy the value of the subject is exiiressly agreed, or is, as between the parties, the amount insured, A wager policy is a pretended insurance, founded on an ideal risk, where the insured has no interest in the thing insured, and can therefore sustain no loss by the happening of any of the misfortunes insured against. These policies are strongly reprobated. 3 Kent, Comm. 225.
2. Records and documents expressly re ferred to in the policy are in effect, for the purpose of the reference, e part of the con tract. 1 Phillips, Ins. 70-74 ; 22 Conn. 235 ; 37 Me. 137 ; 20 Barb. N. Y. 468 ; 23 Penn. St. 50 ; 23 Eng. L. & Eq. 514 ; 2 N. H. 551 ; 33 id. 203 , 10 Cush. Mass. 337. A policy rnay take effect on actual or construct. ive delivery, and may be retrospective where neither party knows the prior circumstances. 1 Phillips Ins. ch. xi. sect. i.; 1 Ind. 196, 27 Penn. 'St. 268 42 Me. 259 ; 25 Conn. 207 ; 17 N. Y. 415'; 2 Dutch. N. J. 268 ; Gray, Mass. 52.
Every policy, whether marine, against fire, or on life, specifies or imports parties, and specifies the subject or interest intended t,o be insured, the premium or other considera tion, the amount insured, the risks and perils for which indemnity is stipulated, and the pe riod of the risk or the terminus a quo and ad quem.
3. The duration of the risk, under a marine insurance or one on inland navigation, is either from one geographical terminus to another, or for a specified. time ; that of a fire-policy is for a specified time ; one on life is either for life or a term of years, months, etc. It is a leading principle, as to the con struction of a policy of insurance, that its distinguishing character as a contract of in demnity is to be favored ; which is in con formity with the common maxim, ut res valeat magis ram pereat. 1 Phillips, Ins. ch. i. sect. xiii. ; 8 N. Y. 351 ; 18 id. 385 ; 8 Cush. Mass. 393 ; 9 id. 479 , 10 id. 356 ; 17 Penn. St. 253 ; 19 id. 45 ; 23 id. 262; 32 id. 381 29 Eng. L. & Eq. 111, 215 ; 33 id. 514 ; 2 Du.'N. Y. 419, 554 ; 3 id. 435 ; 5 id. 517, 594 ; 14 Barb. N. Y. 383 ; 20 id. 635 16 Mo. 98 ; 22 id. 82 ; 22 Conn. 235 ; 13 Monr. Ky. 311 ; 16 id. 242 ; 3 Ind. 23 11 id. 171 ; 28 N. H. 234 ; 29 id. 182 ; 2 'Curt. C. C. 322, 610 ; 37 Me. 137 ; 4 Zabr. N. J. 447 ; 18 Ill. 553 ; 4 R. I. 159 5 id. 426 ; 6 Gray, Mass. 214, 257 ; 7 id. 26'1 ; 8 Ohio, 458.
4. In marine insurance the contract has necessarily more implied reference to cus toms and usages than most other contracts ; or, in other words, a larger proportion of the stipulations are not specifically expressed in the instrument, 1 Phillips, Ins. 119 ; 1,vhence it has been thought to be an imper fect, obscure, confused instrument. 1 ail lips, Ins. 6, n. 3 ; 1 East, 579 ; 5 ell-ouch, 342 ; 1 Burr. 347. But the difficulty in giv ing it a practical construction seems to arise more from the complication of the circum stances necessarily involved, than from any re mediable defects in its provisions and phrase ology. New provisions are, however, needed, from time to time, to adapt the contract to new circumstances. A mistake in filling up a policy may be corrected by order of a court of equity. 1 Phillips, Ins. 117 ; 5 Bos. & P. 322 2 Caines, N. Y. 339 ; Wash. C. C. 415 ; Ves. Sen. Ch. 3l 7, 456 ; 2 Cranch, 441 ; 2 Johns. N. Y. 330 ; 1 Ark. 545 ; 1 Paige, Ch. N. Y. 278 ; 2 Curt. C. C. 277.
See ABANDONMENT; AVERAGE; INSURABLE INTEREST ; INSURANCE ; SALVAGE ; Loss ; TOTAL Loss.