As if the company feared lest otherwise their enu meration of risks might not be complete, they add the all inclusive "and all other perils, losses and misfor tunes." To comprehend the reason for the broad scope of the marine policy one must go back to its origin. Be fore insurance became a separate business, the mer chants had been in the habit of insuring one another in a cooperative manner. The risks against which they insured one another had reached the large pro portions shown in the quotation from the policy. It followed, therefore, that if individuals were to en gage in the business of insurance, and so relieve the merchant of that part of the risk of his adventure, they must furnish the merchant with the same pro- ' tection against the large number of risks which had formerly been furnished him thru cooperation with his fellow-merchants. It would. not have been pos sible to establish the business of marine insurance so successfully if it had failed to give the very ample pro tection demanded by the necessities of commerce in the early days.
11. War to the outbreak of war in 1914 the world had been so long on a peace basis that by means of special agreements added to the policy, the risk of war had been eliminated and insurance rates much reduced. When the war came there was no experience to guide the marine underwriter in fix ing a proper charge to cover the war risk. Since the development of the modern navies there had been no war between two great maritime powers, with large merchant interests on the sea as well as large sea forces to protect their own commerce and prey on that of the other nations.
There were but two solutions for such a problem. One was to do what one nation did—discontinue its merchant service entirely, calling all vessels in to the nearest ports. The other was for the government to come forward and assume the war risk. Plans for doing the latter had been worked out in Great Britain some time previous to the war, and they were put into execution almost immediately after the war broke out. The arrangement involves cooperation between the shipowner and the government. No group of private individuals could afford to run the risk that might be involved in the destruction of ships by the navy of a foreign power. This element or risk must be borne by a larger body than the underwriters represented, and the nation itself was the only body that was large enough to bear it without undue strain.
In the United States the government established a war risk bureau which assumed the war risk hazard for American ships. The bureau has been very suc cessfully conducted, and the experience gained would be useful to the nation in the event of any future war.
Canadian marine underwriters have had a large vol ume of business, especially during the course of the European war. The congestion in shipping ports has caused underwriters considerable anxiety at ports of both shipment and discharge. This extra hazard would not be likely to disappear in war times and consideration in rate-making will be given to this factor. Owing to the demand for freight in conse quence of expansion of trade and shortage of ships caused by wastage of war, shipowners are not able to give their vessels the overhauling they necessarily re quire; consequently, underwriters have in war periods to pay claims for damage which under ordinary cir cumstances they would not have to meet.
12. Implied is a tacit agree ment between insurer and insured on four points. They do not appear in the policy, but they are as much a part of it as if they did. These are the fol lowing: (a) The element of good faith. This was set forth in the insurance laws of Amsterdam in 1598, in the following language: As contracts of insurance are contracts of good faith, wherein no fraud or deceit ought to take place, in case it be found that the insured or insurers, captains, shippers, pilots, or others, use fraud, deceit, or craft, they shall not only forfeit their payments by their deceit and craft, but shall also be liable to the loss and damage occasioned thereby, and be corporally punished, as a terror and example to others ; and, if it be found that they have used notorious malversa tion and great fraud, they shall be punished with death, even as pirates and robbers.
(b) The seaworthiness of the ship.
(c) The supposition that the voyage will be prose cuted without unnecessary delay from port to port.
(d) The understanding that the business engaged in shall be a legal business and shall conform to all the requirements of law as respects credentials or docu ments.
13. TVhat is insured.—The policy may cover the ves sel itself, sometimes described as "lost or not lost," the cargo, or the freight, the latter meaning the sum earned for transporting the cargo from one port to another.
The phrase "lost or not lost" may strike one as pe culiar, since it implies that insurance may be taken out on property which is not in existence when the con tract is made. This may indeed be the fact. There are many cases in which insurance is desired on prop erty when it is at sea and, whether it exists or not, is unknown to the underwriter or to the parties who seek insurance. This provision, therefore, is as old as the business of marine insurance. In other forms of insurance there is nothing analogous to this peculiar provision of the marine policy.