Posted: March 16th, 2022

How Marine Insurance Law addresses the Issue of Causation

MARITIME INSURANCE

Code + Course
Student’s Name
University Name
City
Date

Introduction
Maritime insurance.
How Marine Insurance Law addresses the Issue of Causation.
Marine insurance is a contract by which a party undertakes to indemnify another party, for a stipulated premium, against all perils or sea hazards, to which his ship, cargo or freight, or some of the mentioned, may be exposed, in the course of a certain voyage or fixed period of time. Cargo is usually insured against marine perils which are demarcated as perils consequent or related to navigation, including hazards such as war perils, fire, seizures, acts of pirates or thieves, restraints and all type of action in respect of marine policy. Marine insurance plays a vital role in the shipping law and shipment industry. There are also other types of marine insurance which include; P& I cover, cargo, and other third party liability coverage. For one to be insured, there must be an insurable interest in the theme of the marine insurance treaty. There must be a policy which specifies the perils insured against (Yvonne, 2014: 2024 – Essay Writing Service | Write My Essay For Me Without Delay).
In subjection to the provisions of 1906 Act, an insurer can only be legally responsible for a loss proximately instigated by an insured peril, but, on the subject of those above, the underwriter should not be liable for any loss, which is not proximately triggered by the insured hazard, or incase a marine policy provides otherwise. If a loss occurs, the underwriter puts the insured back to the financial position he was prior to the loss, and this is where indemnity comes in. Additionally, the insured must not benefit from the loss. Mostly, policies are on (ACV) that is on actual cash value basis (the insured gets back the value equivalent to the piece of property of the same condition and age, same wear and tear) of the property that was destroyed or lost (Francesco & Joseph, 2010 – Essay Writing Service: Write My Essay by Top-Notch Writer).
Nevertheless, there are exceptions to this rule. Firstly, for the valued contracts, there is an agreed amount of the insured property by the insured and the insurer at the time of contract. A definite amount is paid in the event of a total loss. Valued policies are used to insure items which are difficult to valuate in case of a loss. Secondly, is the issue of replacement cost contracts. The damaged property is assessed using cost basis at the time of destruction, damage or loss of replacing or repairing (whichever is less) with like quality and kind, with no deduction for depreciation. However, this type of insurance is charged an extra premium (Geoffrey, et al., 2013).
Causation is a fundamental issue in ascertainment of whether an insurance company covers certain damage or loss. Marine insurance is well –known for the proximate cause of loss investigation so as to determine the insurer’s liability. English court’s decisions are far from reconcilable, the problem being the inference of the facts of the matter, and consequently, the complexity and uncertainty of causal connection. Proximity doctrine is a statutory requirement in marine insurance cases and a common law rule in non- marine insurance. The 1906 Act did affirm the proximity by statute doctrine but without any exhaustive expositions. A remarkable explanation of proximity can be seen in the case of Norwich Union Fire Insurance Society Ltd Versus Leyland Shipping Co Ltd. The insurance undertaken for the ship was against the perils of the sea, any war risk was precisely excluded.
A German submarine torpedoed it, and the ship sustained severe injury. A gale swept over and caused the ship to bump and range against the quay when it tugged to the harbor. Following an order from harbor authority, the ship was anchored inside the outer breakwater. The scupper caused the ship head seventeen feet in the ground, the back of the ship was broken due to the tide rose, this making the ship to sink. Under the peril of the seas policy, the assured claimed that although the ship had suffered a partial loss due to the torpedo, total loss caused by the gale and the bumping against the quay resulted to the damage. Conversely, the underwriter argued that the main and operative cause of that loss which was suffered by the ship was due to torpedo. The subsequent cause arose due to the original cause of the torpedo; therefore, none of the later situation would stop operation of the original cause which was the main cause. It was held that proximate cause of the loss was the torpedo because, from the time the ship was torpedoed, it was always under imminent risk of sinking (Jonathan, 2008 – Affordable Custom Essay Writing Service | Write My Essay from Pro Writers).
Thus, indubitably, as aforementioned, causation regime is a crucial issue in determining whether certain damage or loss is covered in a given policy. This case has analyzed the concept of the proximate cause. In situations which involve various influences, the matter of fact should be deliberated carefully (Jonathan, et al., 2013). Causa proxima non remota spectatur is frequently quoted as the central principle in marine insurance law which is embodied by the proximity doctrine. The loss must be connected to the supposed cause. For example in Taylor versus Dunbar, the ewer carrying meat from Hamburg to London bumped into tempestuous weather conditions. As a result, the meat became rancid and was thrown into the sea. The judges agreed unanimously that the loss was caused solely by the delay and retardation, although such delay was brought about by the adverse weather conditions. In this case, the sea risk was merely regarded as the earlier time chain components, without any legal effect (Leslie, 1972) .
Most jurisdictions have broadly acknowledged the doctrine of proximity in relation to causation in the statutes form as provided in the Act 1906 of Marine Insurance. Though this doctrine is statutorily provided in the Act, the requirement is still subjected to the agreement in the policy by the parties. That is, they have the freedom to exclude or affirm the effect of the doctrine through explicit expressions. In summary, though the proximate cause is termed as one of the necessary conditions, it is the most efficiency for the loss occurrence. The loss doesn’t have to be the predictable and inevitable consequence of the proximate cause, being taken as a causation test. Besides, there is a test of common sense which may be applicable in cases where the court is faced with the possibility of making an unjust decision or an arbitrary if the causation rules established in law are followed strictly (Francis, 2013).
Nonetheless, the test is not to be availed as an obstruction in applying the legal causation rules due to the decision which can cause an imbalance of interest between the parties (Alex, 1987). For example, there should be an establishment of a causal link between the consequence for a valid claim and conduct. Moreover, the common test is only in effect in the process of proximate cause selection of a causal linkage in law, and not a ground to make a favorable decision to the assured, as long as there is involvement of an insured peril (Frederick, 2010 – Essay Writing Service: Write My Essay by Top-Notch Writer).
The rule of Utmost Good Faith in Insurance.
Utmost good faith also named as uberrimae fidei is the name of a legal doctrine governing insurance contracts. It is a fundamental principle of insurance which has been affirmed in the Marine Insurance Act section seventeen, meaning that all the involved parties should make a full declaration of all material facts in the insurance contract. In general, contracts are subject to caveat emptor doctrine (let the buyer beware), meaning that for each party questions must be asked so as to make sure they have all the information which is needed before the contract signing (Vine, 1971). However, insurance contracts are not creäted on the said doctrine (Bhanu, 2013). Everyone involved in the negotiations is obligated to disclose all the information relevant to all the other parties in the insurance contract (Bhanu, 2013).
The doctrine of what must be disclosed was established in Carter versus Boehm (1766) case. Mr. Carter took out an insurance policy against the fort which was being taken by an opponent with Mr. Boehm. The witness being Captain Tryon testified that the fort was built in fighting back native assaults but not European opponents, and that Mr. Carter knew about this, and the port was likely to be attacked by the French people. The French attacked. Mr. Boehm refused to accept the liability and so Mr. Carter sued. It was held that the proposer being Mr. Carter in this matter, was required to disclose all material facts as he owed a duty of utmost good faith to the underwriter. This case showed a legal position of the said case law.
There is also the breach of the utmost good faith which can be classified into either misrepresentation or non- disclosure (Schoenbaum, 1998). Alternatively, the classification can either be on a fraudulent breach or a non-fraudulent breach. All these breaches have remedies. For example, there is waive of breach, lest there is the validity of the contract retrospectively (Anon., 2016: 2024 – Do my homework – Help write my assignment online). The second remedy is to avoid the contract within a reasonable time from inception of the policy, with the effect of having returnable claims or premiums which were previously paid without the facts of the breach, unless the breach was a fraudulent misrepresentation on the insured part (Bennett, 1996). Thirdly, in addition to those mentioned above, in case of negligent or fraudulent misrepresentation, one can sue for damages (Thomas, 1992) .
Moreover, there are clauses which are codified in the Act 1906 of Marine Insurance. An example of some is; Clause 17 which dictates that a marine contract is based upon ubrimmae fidei and if either party does not observe this, there may be avoidance of the contract by the other party. Another clause codified is clause18 (1), which denotes that before any contract is concluded, the insured must disclose to the underwriter every material circumstance which he knows, and he is deemed to know every situation which, he should be aware in the normal course of his business. If there is no disclosure from the assured, the underwriter may avoid the contract (Xing-quan, 2006 – Write a paper; Professional research paper writing service – Best essay writers).
Additionally, there are material facts which have no need of disclosing by the insurer or insured. For example, those related to insurer’s survey, facts of law, and the ones covered by policy conditions, etc. Conversely, there are facts which must be disclosed. For example, facts that would escalate a loss possibility, those which reduce the rights of subrogation for the insurer, facts which would make a risk seem great than usual, etc. On the other hand, there are several unfair aspects in the current law regarding the principle: if an error is reasonable in the circumstance, the insurer can still be in breach; for example, if the question on hand requires some specific knowledge which is technical, of which they don’t have. Another unfair aspect is that the only remedy which is there in case of a breach of the doctrine is a retrospective evasion of the whole contract. Lastly, on the unfair aspects, there is no requirement to the underwriter to show that the misrepresentation or non-disclosure has any causal link with the claim in avoidance of the contract (Colinvaux & Sidney, 1984).
On the other hand, there are reforms which have been made in relation to the aforementioned; the issue of materiality which was represented in the case of Synergy Health Ltd versus CGU Insurance. The assured informed its insurance company that it was installing an intruder alarm, four months before the policy renewal (Thomas, 1992). Due to administrative errors, a major fire occurred and the alarm was not installed. It was held that due to a failure of correcting its material misrepresentation, there was implied repetition of the misrepresentation on renewal by the insured. However, on the facts, there was no inducement of the misrepresentation to the insurance company for the policy renewal and so couldn’t avoid it. In conclusion, it is the recommendation that a full and guileless disclosure be made to the insurers in avoidance of disclaimer at a later stage (Schoenbaum, 1998).

Works Cited
Alex, L. P., 1987. The law and practice of marine insurance and average. 1st ed. London: Stevens.
Andrew, M., 2011. The modern law of insurance. 3rd ed. London: Edinburgh : LexisNexis.
Anon., 2016: 2024 – Do my homework – Help write my assignment online. Good faith in insurance and takaful contracts in Malaysia : a comparative perspective. 1st ed. Singapore: Springer.
Bennett, H. N., 1996. The law of marine insurance.. s.l.:Oxford University Press.
Bhanu, K. K., 2013. The Principle of Utmost Good Faith in Indian Marine Insurance Contracts. The journal of international maritime law, 19(2), pp. 165-172.
Colinvaux, R. P. & Sidney, P., 1984. The law of insurance. s.l.:Sweet & Maxwell..
Francesco, R. & Joseph, R. I., 2010 – Essay Writing Service: Write My Essay by Top-Notch Writer. A manual of maritime law : consisting of a treatise on ships and freight and a treatise on insurance. 6th ed. Clark: The Lawbook Exchange, Ltd..
Francis, r., 2013. Marine Insurance : Law and Practice.. 2nd ed. Hoboken: Taylor and Francis.
Frederick, T., 2010 – Essay Writing Service: Write My Essay by Top-Notch Writer. Marine insurance : its principles and practice. 2nd ed. Charleston: Bibliolife.
Geoffrey, N. H., Tim, M. & Keith, S., 2013. Marine Insurance Clauses.. 10th ed. Hoboken: Taylor and Francis,.
Geoffrey, N. H., Tim, M. & Keith, S., 2013. Marine Insurance Clauses.. 5th ed. Hoboken: Taylor and Francis.
Jonathan, B. G., Robert, M. M. & Joseph, A., 2013. Arnould : law of marine insurance and average.. 18th ed. London: Sweet & Maxwell.
Jonathan, C. B. G., 2008 – Affordable Custom Essay Writing Service | Write My Essay from Pro Writers. Arnould’s law of marine insurance and average. 17th ed. London: Sweet & Maxwell.
Leslie, J. B., 1972. Marine insurance claims : American law and practice. 2nd ed. Cambridge: Cornell Maritime Press.
Muhammad , M. B., 2016: 2024 – Do my homework – Help write my assignment online. Effects of insurance on maritime liability law.. 10th ed. s.l.:Springer International Pu.
Robert, F., 2004. Admiralty and maritime law. 4th ed. Washington, D.C: Federal Judicial Center.
Schoenbaum, T. J., 1998. The Duty of Utmost Good Faith in Marine Insurance Law: A Comparative Analysis of American and English Law. A Comparative Analysis of American and English Law, 29(1), p. 9.
Steven, E. G., 2015 – Research Paper Writing Help Service. The Status of the Principle of Utmost Good Faith in the Law of Marine Insurance in the USA. Journal of international maritime law, 21(2), pp. 133-145.
Thomas, S. W., 1992. Utmost good faith in reinsurance. Duke Law Journal,, 41(6), pp. 1548-1597.
Vine, D., 1971. utmost good faith. 1st ed. New York: Bantam Books, a National General Company.
Xing-quan, C. A., 2006 – Write a paper; Professional research paper writing service – Best essay writers. On the principle of Utmost Good Faith in Insurance Law: Reviewing the Theoretical Foundation of the Duty of Disclosure. Journal of Gansu Political Science and Law Institute, Volume 1, p. 009.
Yvonne, B., 2014: 2024 – Essay Writing Service | Write My Essay For Me Without Delay. Maritime law. 3rd ed. New York: Oxon [UK] NY : Routledge.

Order | Check Discount