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MARINE INSURANCE ACT, 1963
11 of 1963
18th April,1963
An Act to codify the law relating to marine insurance. Be it enacted by Parliament in the Fourteenth Year of the Republic of India as follows:-
SECTION 01: SHORT TITLE AND COMMENCEMENT
(1) This Act may be called the Marine Insurance Act, 1963.
(2) It shall come into force on such date1as the Central Government may, by notification in the Official Gazette, appoint.
SECTION 02: DEFINITIONS
In this Act, unless the context otherwise requires,-
(a) "contract of marine insurance" means a contract of marine insurance as defined by section 3-;
(b) "freight" includes the profit derivable by a ship-owner from the employment of his ship to carry his own goods or other movables, as well as freight payable by a third party, but does not include passage money:
(c) "insurable property" means any ship, goods or other movables which are exposed to maritime perils;
(d) "marine adventure" includes any adventure where-
(i) any insurable property is exposed to maritime perils;
(ii) the earnings or acquisition of any freight, passage money, commission, profit or other pecuniary benefit, or the security for any advances, loans, or disbursements is endangered by the exposure of insurable property to maritime perils;
(iii) any liability to a third party may be incurred by the owner of or other person interested in or responsible for, insurable property by reason of maritime perils;
(e) "maritime perils" means the perils consequent on, or incidental to, the navigation of the sea, that is to say, perils of the sea, fire, war perils, pirates, rovers, thieves, captures, seizures, restraints and detainments of princes and peoples, jettisons, barratry and any other perils which are either of the like kind or may be designated by the policy;
(f) "movables" means any movable tangible property, other than the ship, and includes money, valuable securities and other documents;
(g) "policy" means a marine policy;
(h) "ship" includes every description of vessel used in navigation;
(i) "suit" includes counter-claim and set-off.
SECTION 03: MARINE INSURANCE DEFINED
A contract of marine insurance is an agreement whereby the insurer undertakes to indemnify the assured, in the manner and to the extent thereby agreed, against marine losses, that is to say, the losses incidental to marine adventure.
SECTION 04: MIXED SEA AND LAND RISKS
Clause 4.- The Committee are of the view that an adventure analogous to a marine adventure should include an adventure where any ship, goods or other moveables are exposed to perils incidental to local or inland transit. An explanation has, therefore, been added to this effect J.C.R. -Gaz. of Ind., 28-2-1963, Pt. II, S. 2, Ext., p. 96.
SECTION 05: LAWFUL MARINE ADVENTURE
Subject to the provisions of this Act, every lawful marine adventure may be the subject of a contract of marine insurance. Clause 5.- As a consequence of the inclusion of the definitions of the terms "marine adventure", "insurable Property", and "maritime perils" in clause 2, sub-clause (2) has been deleted.- J.C.R.-Gaz. of Ind,, 28-2-1963, Pt. II, S.2,Ext.,p.96.
SECTION 06: AVOIDANCE OF WAGERING CONTRACTS
Clause 6.- The Committee are of the opinion that the word 'gaming' in sub-clauses (1) and (2) should be deleted as unnecessary -J.C.R. -Gaz. of Ind., 28-2-1963, Pt. II, S. 2, Ext., p. 96.
SECTION 07: INSURABLE INTEREST DEFINED
(1) Subject to the provisions of this Act, every person has an insurable interest who is interested in a marine adventure,
(2) In particular a person is interested in a marine adventure where he stands in any legal or equitable relation to the adventure or to any insurable property at risk therein, in consequence of which he may benefit by the safety or due arrival of insurable property, or may be prejudiced by its loss, or by damage thereto, or by the detention thereof, or may incur liability in respect thereof.
SECTION 08: WHEN INTEREST MUST ATTACH
(1) The assured must be interested in the subject-matter insured at the time of the loss, though he need not be interested when the insurance is effected: Provided that, where the subject-matter is insured "lost or not lost", the assured may recover although he may not have acquired his interest until after the loss, unless at the time of effecting the contract of insurance the assured was aware of the loss and the insurer was not.
(2) Where the assured has no interest at the time of the loss, he cannot acquire interest by any act or election after he is aware of the loss.
SECTION 09: DEFEASIBLE OR CONTINGENT, INTEREST
(1) A defeasible interest is insurable, as also is a contingent interest.
(2) In particular, where the buyer of goods has insured them, he has an insurable interest, notwithstanding that he might, at his election, have rejected the goods, or have treated them as at the seller's risk, by reason of the latter's delay in making delivery or otherwise.
SECTION 10: PARTIAL INTEREST
A partial interest of any nature is insurable.
SECTION 11: REINSURANCE
(1) The insurer under a contract of marine insurance has an insurable interest in his risk, and may reinsure in respect of it.
(2) Unless the policy otherwise provides, the original assured has no right or interest in respect of such reinsurance.
SECTION 12: BOTTOMRY
The lender of money on bottomry or respondent has an insurable interest in respect of the loan.
SECTION 13: MASTER'S AND SEAMEN'S WAGES
The matter or any member of the crew of a ship has an insurable interest in respect of his wages.
SECTION 14: ADVANCE FREIGHT
In the case of advance freight, the person advancing the freight has an insurable interest, in so far as such freight is not repayable in case of loss.
SECTION 15: CHARGES OF INSURANCE
The assured has an insurable interest in the charges of any insurance which he may effect
SECTION 16: QUANTUM OF INTEREST
(1) Where the subject-matter insured is mortgaged, the mortgagor has an insurable interest in the full value thereof, and the mortgagee has an insurable interest in respect of any sum due or to become due under the mortgage.
(2) A mortgagee, consignee, or other person having an interest in the subject-matter insured may insure on behalf and for the benefit of other persons interested as well as for his own benefit.
(3) The owner of insurable property has an insurable interest in respect of the full value thereof, notwithstanding that some third person may have agreed, or be liable to indemnify him in case of loss.
SECTION 17: ASSIGNMENT OF INTEREST
Where the assured assigns or otherwise parts with his interest in the subject-matter insured, he does not thereby transfer to the assignee his rights under the contract of insurance, unless there be an express or implied agreement with the assignee to that effect. But the provisions of this section do not affect transmission of interest by operation of law.
SECTION 18: MEASURE OF INSURABLE VALUE
Subject to any express provision or valuation in the policy, the insurable value of the subject-matter insured must be ascertained as follows:-
(1) In insurance on ship, the insurable value is the value, at the commencement of the risk, of the ship, including her outfit provisions, and stores for the officers and crew, money advanced for seamen's wages, and other disbursements if any incurred to make the ship fit for the voyage or adventure contemplated by the policy, plus the charges of insurance upon the whole; The insurable value, in the case of a steamship, includes also the machinery, boilers, and coals and engine stores if owned by the assured; in the case of a ship driven by power other than steam includes also the machinery and fuels and engine stores, if owned by the assured; and in the case of a ship engaged in a special trade, includes also the ordinary fittings requisite for that trade;
(2) In insurance on freight, whether paid in advance or otherwise, the insurable value is the gross amount of the freight at the risk of the assured, plus the charges of insurance;
(3) In insurance on goods or merchandise, the insurable value is the prime cost of the property insured, plus the expenses of and incidental to shipping and the charges of insurance upon the whole;
(4) In insurance on any other subject-matter, the insurable value is the amount at the risk of the assured when the policy attaches, plus the charges of insurance.
Clause 18.- The Committee feel that in connection with the ascertainment of insurable value, provision should be made to cover cases of ships driven by power other than steam. The clause has been amended accordingly.-J.C.R. -Gaz. of Ind., 28-2-1963, Pt. II, S. 2, Ext., p. 96.
SECTION 19: INSURANCE IS UBERRIMAE FIDEI
A contract of marine insurance is a contract based upon the utmost good faith, and if the utmost good faith be not observed by either party, the contract may be avoided by the other party.
SECTION 20: DISCLOSURE BYASSURED
(1) Subject to the provisions of this section, the assured must disclose to the insurer, before the contract is concluded, every material circumstance which, is known to the assured, and the assured is deemed to know every circumstance which, in the ordinary course of business, ought to be known to him. If the assured fails to make such disclosure, the insurer may avoid the contract.
(2) Every circumstance is material which would influence the judgment of a prudent insurer in fixing the premium, or determining whether he will take the risk.
(3) In the absence of inquiry the following circumstances need not be disclosed, namely:-
(a) any circumstance which diminishes the risk.
(b) any circumstance which is known or presumed to be known to the insurer. The insurer is presumed to know matters of common notoriety or knowledge, and matters which an insurer in the ordinary course of his business as such ought to know;
(c) any circumstance as to which information is waived by the insurer;
(d) any circumstance which it is superfluous to disclose by reason of any express or implied warranty.
(4) Whether any particular circumstance, which is not disclosed, be material or not is, in each case, a question of fact.
(5) The term "circumstance" includes any communication made to, or information received by, the assured.
SECTION 21: DISCLOSURE BY AGENT EFFECTING INSURANCE
Subject to the provisions of the preceding section as to circumstances which need not be disclosed, where an insurance is effected for the assured by an agent, the agent must disclose to the insurer-
(a) every material circumstance which is known to himself, and an agent to insure is 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.
SECTION 22: REPRESENTATIONS PENDING NEGOTIATION OF CONTRACT
(1) Every material representation made by the assured or his agent to the insurer during the negotiations for the contract, and before the contract is concluded, must be true. If it be untrue the insurer may avoid the contract.
(2) A representation is material which would influence the judgment of a prudent insurer in fixing the premium, or determining whether he will take the risk.
(3) A representation may be either as to a matter of fact, or as to a matter of expectation or belief.
(4) A representation as to a matter of fact is true, if it be substantially correct, that is to say, if the difference between what is represented and what is actually correct would not be Considered material by a prudent insurer.
(5) A representation as to a matter of expectation or belief is true if it be made in good faith.
(6) A representation may be withdrawn or corrected before the contract is concluded.
(7) Whether a particular representation be material or not, is, in each case, a question of fact.
SECTION 23: WHEN CONTRACT IS DEEMED TO BE CONCLUDED
A contract of marine insurance is deemed to be concluded when the proposal of the assured is accepted by the insurer, whether the policy be then issued or not; and for the purpose of showing when the proposal was accepted, reference may be made to the slip, covering note or other customary memorandum of the contract, although it be unstamped. Clause 23.- The Committee are of the opinion that as in the English Act mention may be made of not only covering notes but also slips as illustrative of customary memoranda. The clause has been amended accordingly.- J.C.R. Gaz. of Ind" 28-2-1963, Pt. II, S. 2, Ext., p. 96.
SECTION 24: CONTRACT MUST BE EMBODIED IN POLICY
A contract of marine insurance shall not be admitted in evidence unless it is embodied in a marine policy in accordance with this Act. The policy may be executed and issued either at the time when the contract is concluded, or afterwards.
SECTION 25: WHAT POLICY MUST SPECIFY
A marine policy must specify-
(1) the name of the assured, or of some person who effects the insurance on his behalf;
(2) the subject-matter insured and the risk insured against;
(3) the voyage, or period of time, or both, as the case may be, covered by the insurance;
(4) the sum or sums insured;
(5) the name or names of the insurer or insurers.
SECTION 26: SIGNATURE OF INSURER
Clause 26.- The Committee feel that in view of the provisions contained in section 46 of the Companies Act, 1956-the proviso relating to a seal of a corporation is not necessary. The clause has therefore, been amended accordingly.- J.C.R. Gaz. of Ind., 28-2-1963, Pt. II, S. 2, Ext., p. 96.
SECTION 27: VOYAGE AND TIME POLICIES
Clause 27.- The Committee feel that the reference to sub-section (2) of section 7 of the Indian Stamp Act, 1899-is now not necessary. This reference has, therefore, been deleted.- J.C.R. Gaz. of Ind., 28-2-1963, Pt. II, S. 2, Ext., p. 96.
SECTION 28: DESIGNATION AND SUBJECT-MATTER
(1) The subject-matter insured must be designated in a marine policy with reasonable certainty.
(2) The nature and extent of the interest of the assured in the subject-matter insured need not be specified in the policy.
(3) Where the policy designates the subject-matter insured in general terms, it shall be construed to apply to the interest intended by the assured to be covered.
(4) In the application of this section regard shall be had to any usage regulating the designation of the subject-matter insured.
SECTION 29: VALUED POLICY
(1) A policy may be either valued or unvalued.
(2) A valued policy is a policy which specifies the agreed value of the subject-matter insured.
(3) Subject to the provisions of this Act, and in the absence of fraud, the value fixed by the policy is, as between the insurer and assured, conclusive of the insurable value of the subject intended to be insured, whether the loss be total or partial.
(4) Unless the policy otherwise provides, the value fixed by the policy is not conclusive for the purpose of determining whether there has been a constructive total loss.
SECTION 30: UNVALUED POLICY
An unvalued policy is a policy which does not specify the value of the subject-matter insured, but subject to the limit of the sum insured, leaves the insurable value to be subsequently ascertained, in the manner hereinbefore explained.
SECTION 31: FLOATING POLICY BY SHIP OR SHIPS
(1) A floating policy is a policy which describes the insurance in general terms, and leaves the name or names of the ship or ships and other particulars to be defined by subsequent declaration.
(2) The subsequent declaration or declarations may be made by endorsement on the policy, or in other customary manner.
(3) Unless the policy otherwise provides, the declarations must be made in the order of dispatch or shipment. They must, in the case of goods, comprise all consignments within the terms of the policy, and the value of the goods or other property must be honestly stated, but an omission or erroneous declaration may be rectified even after loss or arrival, provided the omission or declaration was made in good faith.
(4) Unless the policy otherwise provides, where a declaration of value is not made until after notice of loss or arrival, the policy must be treated as an unvalued policy as regards the subject-matter of that declaration.
SECTION 32: CONSTRUCTION OF TERMS IN POLICY
(1) A policy may be in the form in the Schedule.
(2) Subject to the provisions of this Act, and unless the context of the policy otherwise requires, the terms and expressions mentioned in the Schedule shall be construed as having the scope and meaning assigned to them in the Schedule.
SECTION 33: PREMIUM TO BE ARRANGED
(1) Where an insurance is effected at a premium to be arranged, and no arrangement is made, a reasonable premium is payable.
(2) Where an insurance is effected on the terms that an additional premium is to be arranged in a given event, and that event happens but no arrangement is made, then a reasonable additional premium is payable.
SECTION 34: DOUBLE INSURANCE
(1) Where two or more policies are effected by or on behalf of the assured on the same adventure and interest or any part thereof, and the sums insured exceed the indemnity allowed by this Act, the assured is aid to be over-insured by double insurance.
(2) Where the assured is over-insured by double insurance-
(a) the assured, unless the policy otherwise provides, may claim payment from the insurers in such order as he may think fit, provided that he is not entitled to receive any sum in excess of the indemnity allowed by this Act;
(b) where the policy under which the assured claims is a valued policy, the assured 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;
(c) where the policy under which the assured claims is an unvalued policy he must give credit, as against the full insurable value, for any sum received by him under any other policy;
(d) where the assured receives any sum in excess of the indemnity allowed by this Act, he is deemed to hold such sum in trust for the insurers, according to their right of contribution among themselves.
SECTION 35: NATURE OF WARRANTY
(1) A warranty, in the following sections relating to warranties, means a promissory warranty, that is to say a warranty by which the assured undertakes that some particular thing shall or shall not be done, or that some condition shall be fulfilled, or whereby he affirms or negatives the existence of a particular state of facts.
(2) A warranty may be express or implied.
(3) A warranty, as above defined, is a condition which must be exactly complied with, whether it be material to the risk or not. If it be not so complied with, then, subject to any express provision in the policy the insurer is discharged from liability as from the date of the breach of warranty but without prejudice to any liability incurred by him before that date.
SECTION 36: WHEN BREACH OF WARRANTY EXCUSED
(1) Non-compliance with a warranty is excused when, by reason of a change of circumstances, the warranty ceases to be applicable to the circumstances of the contract, or when compliance with the warranty is rendered unlawful by any subsequent law.
(2) Where a warranty is broken, the assured cannot avail himself of the defence that the breach has been remedied, and the warranty complied with before loss.
(3) A breach of warranty may be waived by the insurer.
SECTION 37: EXPRESS WARRANTIES
(1) An express warranty may be in any form of words from which the intention to warrant is to be inferred.
(2) An express warranty must be included in, or written upon, the policy, or must be contained in some document incorporated by reference into the policy.
(3) An express warranty does not exclude implied warranty, unless it be inconsistent therewith.
SECTION 38: WARRANTY OF NEUTRALITY
(1) Where insurable property, whether ship or goods, is expressly warranted neutral, there is an implied condition that the property shall have a neutral character at the commencement of the risk, and that, so far as the assured can control the matter, its neutral character shall be preserved during the risk.
(2) Where a ship is expressly warranted "neutral", there is also an implied condition that, so far as the assured can control the matter, she shall be properly documented, that is to say, that she shall carry the necessary papers to establish her neutrality, and that she shall not falsify or suppress her papers, or use simulated papers. If any loss occurs through breach of this condition, the insurer may avoid the contract.
SECTION 39: NO IMPLIED WARRANTY OF NATIONALITY
There is no implied warranty as to the nationality of a ship, or that her nationality shall not be changed during the risk.
SECTION 40: WARRANTY OF GOOD SAFETY
Where the subject-matter insured is warranted "well" or "in good safety" on a particular day, it is sufficient if it be safe at any time during that day.
SECTION 41: WARRANTY OF SEAWORTHINESS OF SHIP
(1) In a voyage policy there is an implied warranty that at the commencement of the voyage the ship shall be seaworthy for the purpose of the particular adventure insured.
(2) Where the policy attaches while the ship is in port, there is also an implied warranty that she shall, at the commencement of the risk, be reasonably fit to encounter the ordinary perils of the port.
(3) Where the policy relates to a voyage which is performed in different stages, during which the ship requires different kinds of or further preparation or equipment, there is an implied warranty that at the commencement of each stage the ship is seaworthy in respect of such preparation or equipment for the purposes of that stage.
(4) A ship deemed to be seaworthy when she is reasonably fit in all respects to encounter the ordinary perils of the seas of the adventure insured.
(5) In a time policy there is no implied Warranty that the ship shall be seaworthy at any stage of the adventure, but where, with the privity of the assured, the ship is sent to sea in an unseaworthy state, the insurer is not liable for any loss attributable to unseaworthiness.
SECTION 42: NO IMPLIED WARRANTY THAT GOODS ARE SEAWORTHY
(1) In a policy on goods or other moveable there is no implied warranty that the goods or movables are seaworthy.
(2) In a voyage policy on goods or other movables there is an implied warranty that at the commencement of the voyage the ship is not only seaworthy as a ship, but also that she is reasonably fit to carry the goods or other movables to the destination contemplated by the policy,
SECTION 43: WARRANTY OF LEGALITY
There is an implied warranty that the adventure insured is a lawful one, and that, so far as the assured can control the matter, the adventure shall be carried out in a lawful manner.
SECTION 44: IMPLIED CONDITIONS AS TO COMMENCEMENT OF RISK
(1) Where 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, but there is an implied condition that the adventure shall be commenced within a reasonable time, and that i
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