REINSURANCE. Individual underwriters enjoy to only a limited extent the advantages that come from the combination of a large moldier of risks in a group, and consequently single losses may involve a eonsideralde share of their capital. They avoid this danger partly by underwriting only a small portion of the value of each ship they insure, and partly by resorting to reinsurance. As it is always possible to insure a ship as long as it it unknown whether she has suffered dis aster or not. it is customary for those who have insurance in force on a vessel that is overdue to protect themselves by reinsuring her. They are naturally obliged to pay higher premiums than they themselves received. If this process of rein surance is repeated several times, is is frequently the ea:.e. the effect is that a loss is distributed in small proportions over a large number of under writers.
THE Loss. Loss may be complete or partial. When it is complete the settlement between the insured and the underwriters is comparatively simple. On a valued policy an insurer becomes liable for the amount stated in the face of the policy. In the case of an open policy it is neees sary for the insured to prove the value of the property destroyed or the amount of freight lost. Unless otherwise agreed, the value of the ship is its value at the time of starting on the voyage with the value of the ship's stores included : the value of the cargo is its invoice value with the addition of insurance premium and other charges; and the value of the freight is the aniount the ship would have earned if she had reached her destination ill safety.
AnANDONMENT. A peculiar feature of marine insure nee is the practice of abandonment, when the insured surrenders or abandons to the under writers the property covered by the policy and demands- his entire indemnity. This right does not always exist, hut arises only when the in sured property has sutl•cred so serious damage from perils covered by the policy that it amounts to 'constructive' total loss. \Vali regard to the ship or the cargo there is held to be constructive total loss when the damage exceeds one-half the value of the vessel or c:n•go respectively, and when the vessel is eaptured by the enemy or de tained by embargo. There is constructive total loss of cargo when it is so hadl• injured that it has to be sold at some other Wave than its orig inal destination. There is constructive loss of freight when the ship is unable to complete her voyage, or the goods on which the freight is to he paid are so badly damaged that they cannot be carried to their original destination.
When the conditions are such as to give a legal right to abandon, it is optional with the insured whether he will take advantage of the right or not. If lie decides to do so he must give notice to the insurer within a reasonable time; and having once elected to abandon, it is im possible for him to draw back. The effect of abandonment is to vest the title to the insured property in the underwriter and to convey to him all rights and claims on account of the ship and cargo.