Marine Insurance Act, 2018

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THE MARINE INSURANCE ACT, 2018. 
 
 
 
 
CONTENTS 
_______ 
CHAPTER-I 
 
PRELIMINARY 
 
1.   Short title, extent, commencement and application. 
2.   Definitions.  
CHAPTER-II 
 
MARINE INSURANCE 
 
3.   Scope. 
4.   Mixed sea and land risks. 
5.   Marine adventure and maritime perils defined. 
 
CHAPTER-III 
 
INSURABLE INTEREST 
 
6.   Avoidance of wagering or gaming contracts. 
7.   Insurable interest defined. 
8.   When interest must attach. 
9.  Defeasible or contingent interest. 
 

 
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10.  Partial interest. 
11.  Reinsurance.  
12.   Master's and seamen's wages. 
13.   Advance freight. 
14.   Charges of insurance. 
15.   Quantum of interest.  
16.   Assignment of interest. 
CHAPTER-IV 
 
INSURABLE VALUE 
 
17.   Measure of insurable value. 
 
CHAPTER-V 
 
DISCLOSURE AND REPRESENTATION 
18.   Insurance is uberrimae lidei 
19.   The duty of fair presentation. 
20.  Knowledge of insurer. 
21.   Remedies for breach. 
22.  When contract is deemed to be concluded. 
 
CHAPTER-VI 
 
THE POLICY 
23.   Contract must be embodied in policy. 
24.  What policy must specify. 
25.   Signature of insurer. 
26.  Voyage and time policies. 
27.   Designation of subject-matter. 
28.   Valued policy. 
29.   Unvalued policy.  
30.   Floating policy by ship or ships. 
 
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31.   Construction of terms in policy. 
32.  Premium to be arranged.  
 
CHAPTER-VII 
 
DOUBLE INSURANCE 
33.   Double insurance. 
 
CHAPTER-VIII 
 
WARRANTIES 
 
34.  Nature of warranty. 
35.   When breach of warranty excused. 
36.   Express warranty. 
37.   Warranty of neutrality. 
38.  No implied warranty of nationality. 
39.   Warranty of good safety. 
40.   Warranty of seaworthiness of ship. 
41.  No implied warranty that goods are seaworthy. 
42.   Warranty of legality. 
 
CHAPTER-IX 
THE VOYAGE 
43.   Implied condition as to commencement of risk. 
44.   Alteration of port of departure. 
45.   Sailing for· different destination. 
46.   Change of voyage. 
47.  Deviation. 
48.   Several ports of discharge. 
49.   Delay in voyage. 
 
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50.  Excuses for deviation or delay. 
 
CHAPTER-X 
 
ASSIGNMENT OF POLICY 
51.   When and how policy is assignable. 
52.   Insured who has no interest cannot assign. 
 
CHAPTER-XI  
 
THE PREMIUM 
53.   When premium payable.  
54. Policy effected through broker. 
55.  Effect of receipt on policy. 
 
CHAPTER-XII 
 
LOSS AND ABANDONMENT 
56.   Included and excluded losses. 
57.   Partial and total loss. 
58.   Actual total loss. 
59.  Missing ship. 
60.  Effect of transshipment, etc. 
61.   Constructive total loss defined. 
62.    Effect of constructive total loss. 
63.   Notice of abandonment. 
64.   Effect of Abandonment. 
 
CHAPTER-XIII 
 
PARTIAL LOSSES INCLUDING SALVAGE, GENERAL AVERAGE AND PARTICULAR 
CHARGES 
65.  Particular average loss. 
66.  Salvage charges. 
 
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67.   General average loss. 
 
CHAPTER-XIV 
 
MEASURE OF INDEMNITY 
68.  Extent of liability of insurer for loss. 
69.   Total loss. 
70.  Partial loss of ship. 
71.   Partial loss of freight. 
72.   Partial loss of goods, merchandise etc. 
73.   Apportionment of valuation. 
74.   General average contributions and salvage charges. 
75.   Liabilities to third parties. 
76.   General provisions as to measure of indemnity. 
77.   Particular average warranties. 
78.   Successive losses. 
79.   Suing and laboring clause. 
CHAPTER-XV 
 
RIGHTS OF INSURER ON PAYMENT 
80.  Right of subrogation. 
81. Right of contribution. 
82.  Effect of under insurance. 
  
CHAPTER-XVI 
 
RETURN OF PREMIUM 
83.  Enforcement of return. 
84.  Return by agreement. 
85.  Return for failure of consideration. 
 
CHAPTER-XVII 
 
MUTUAL INSURANCE 
 
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86.   Modification of this Act in case of mutual insurance. 
 
CHAPTER-XVIII 
 
SUPPLEMENTAL 
 
87.   Ratification by assured. 
88.   Implied obligations varied by agreement or usage. 
89.   Reasonable time, etc., a question of fact. 
90.   Covering note as evidence. 
91.   Certain provisions to override the Transfer of Property Act 1882 
92.   Repeal. 
93.   Power to issue directives, circulars, guidelines. 
94.   Power to make Rules. 
95.   Power to make Regulations. 
96.   Savings. 
_____________ 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
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THE MARINE INSURANCE ACT, 2018 
 
ACT NO. V OR 2018 
 
 [2nd February, 2018] 
 
An Act to provide for the regulation of the business of marine insurance 
 
WHEREAS it is expedient to provide for the law relating to Marine 
Insurance and matters connected therewith and incidental thereto; 
 
It is hereby enacted as follows:— 
 
CHAPTER-I 
 
PRELIMINARY 
 
1.  Short title, extent, com mencement and application. — (1) This Act may b e called the 
Marine Insurance Act, 2018. 
 
(2)  It extends to the whole of Pakistan.  
 
(3)  It shall come into force at once. 
 
(4)  Notwithstanding any other law for the time being in force and save as otherwise expressly 
provided, this Act shall apply to every contract of Marine Insurance. 
 
2.  Definitions.— (1) In this Act, unless there is anything repugnant in the subject or context,— 
 
(a)  “action includes counter-claim and set off; 
 
(b)  “Commission” means Securities and Exchange Commission established under 
section 3 of the Securities and Exchange Commission of Pakistan Act, 1997 
(XLII of 1997);  
(c)  “freight” includes the profit derivable by a ship owner from the employment of 
his ship to carry his own goo ds or moveables, as well as freight payable by a 
third party, but does not include passage money; 
 
(d)  “marine insurance ” means a contract whereby the insurer undertakes to 
indemnify the insured, in manner and to the extent thereby agreed, against 
marine losses, that is to say, the losses incident to marine adventure; 
 
(e)  “maritime perils” means the perils consequent on, or incidental to, the 
navigation of the sea, that is to say, perils of the seas, fire, war perils, pirates, 
thieves, captures, seizures , restraints and detainments of peoples, jettisons, 
barratry and any other perils, either of the like kind or which may be designated 
by the policy; 
 
(f)  “moveables” means any moveable tangible property, other than the ship and 
includes money, valuable securities and other documents; 
 
(g)  “policy” means a marine policy; and 
 
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(h)  “ship” means any vessel used for the carriage of goods by sea. 
 
 
(2)  The words and expression used herein but not defined in this Act  shall have the same 
meaning as assigned to them in the Insurance Ordinance, 2000 unless the context requires otherwise. 
 
CHAPTER-II 
 
MARINE INSURANCE 
 
3.  Scope.— This Act shall extend to all overseas movements and carriage of goods and 
services whether through ships, inland waterways, aircraft, road transport, rail services, etc. as well as 
to all such carrying vehicles, as long as they are insured by a contract of marine insurance under this 
Act. 
 
4.  Mixed sea and land risks.— (1) A contract of marine insurance may, by its express terms 
or by usage of trade, be extended so as to protect the insured against losses on inland waters or on any 
land risk which may be incidental to any sea voyage. 
 
(2)  Where a ship in course of building, or the launch of a ship, or any adventure analogous to 
a marine adventure, is covered by a policy in the form of a marine policy, the provisions of this Act, 
in so far as applicable, shall apply thereto but, except as by this section provided, nothing in this Act 
shall alter or affect any rule of law applicable to any co ntract of insurance other than a contrast of 
marine insurance as by this Aet defined. 
 
5.  Marine adventure and maritime perils defined. — (1) Subject to the provisions of this 
Act, every lawful marine adventure may be the subject of a contract of marine insurance. 
 
(2) In particular, there is a marine adventure, where,— 
 
(a)   any ship goods or other moveable’s are exposed to maritime perils.  Such 
property is in this Act referred to as “insurable property”; 
 
(b)   the earning or acquisition of any freight, passage money, commission, profit, or 
other pecuniary benefit, or the security for any advances, loan or disbursements, 
is endangered by the exposure of insurable property to maritime perils; and 
 
(c)   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. 
 
CHAPTER-III 
 
INSURABLE INTEREST 
 
6.  Avoidance of wagering or gaming contracts.— (1) Every contract of marine insurance by 
way of gaming or wagering is void.  
 
(2)  A contract of marine insurance is deemed to be a gaming or wagering contract,— 
 
 
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(a)  where the insured has not an insurable interest as defined in section 7 and the 
contract is entered into with no expectation of acquiring such an interest; or 
 
(b)  where the policy is made “interest or no interest,” or “without further proof of 
interest than the policy itself,” or “without benefit of salvage to the insurer,” or 
subject to any other like term: 
 
Provided that, where there is no possibili ty of salvage, a policy may be 
effected without benefit of salvage to the insurer. 
 
7.  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 
 
8.  When interest must attach.— (1) The insured must be interested in the subject has 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 insured 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 insured was aware of the loss, and the insurer was not. 
 
(2)  Where the insured 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. 
 
9. 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. 
 
10. Partial interest.— A partial interest of any nature is insurable. 
 
11. Reinsurance. — (l) 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 poliey otherwise provides, the original insured has no right or interest in respect 
of such reinsurance. 
 
12.  Master's and seamen's wages.— The master or any member of the crew of a ship has an 
insurable interest in respect of his wages. 
 
13.  Advance freight.—In the case of advance freight, the person advancing the freight have 
an insurable interest, in so far as such freight is not repayable in case of loss. 
 
 
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14.  Charges of insurance. — The insured has an insurable interest in  the charges of any 
insurance which he may effect. 
 
15.  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 his own behalf and for the benefit of o ther persons interested as well as for his own 
benefit. 
 
(3)  The owner of insurable property has an insurable interest in respect of the fuli value thereof, 
notwithstanding that some third person may have agreed; or be liable, to indemnify him in ease of loss. 
 
16.  Assignment of interest.— Where the insured 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: 
 
Provided th at the provisions of this section shall not affect a  transmission of interest by 
operation of law. 
 
CHAPTER-IV 
 
INSURABLE VALUE 
 
17.  Measure of insurable value. — (1) Subject to any express provisio n or valuation in the 
policy, the insurable value of the subject-matter insured must be ascertained as follows:— 
 
(a)  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 zany, incurred to make the ship fit for the voyage or 
adventure contemplated by the policy, plus the charges of insurance upon the whole; and 
 
(b)  the insurable value, in the case of a motor ship, includes also the machinery, generators 
boilers, fuel and engine stores if owned by the insured and, in the case of a ship engaged in a special 
trade, the ordinary fittings requisite for that trade. 
 
(2)  In insurance on freight, whether paid in advance or otherwise, the assumable value is the 
gross amount of freight at the risk of the insured, 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 insured when the policy attaches, plus the charges of Insurance. 
 
 
 
 
 
 
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CHAPTER-V 
 
DISCLOSURE AND REPRESENTATION 
 
18.  Insurance is uberrimae lidei.— A contract of r marine insurance is a contract based upon 
the utmost good faith, 
 
19.  The duty of fai r presentation.— (1) Before a contract of insurance is e ntered into, the 
insured is bound to make to the insurer a fair presentation of the risk. This obligation shall be termed 
as the “Duty of Fair Presentation”. 
 
(2)  Accordingly, the insured will be required to,— 
 
(a)   Disclose relevant material circumstances which the insured knows or ought to 
know, that could in fluence the decis ion of an insurer in deciding whether to 
insure the risk and if so, on what terms; or 
 
(b)   Provide sufficient information to put a p .den t insurer on notice that it needs to 
make further enquiries for he purpose of revealing those material circumstances. 
 
(3)  insured will be considered to have known, or ought to have known,— 
 
 
(a)  Information that could be revealed by a reasonable search of available internal 
information; or 
 
(b)  Information held or known by a person/ department responsible for effecting or 
arranging insurance. 
 
(4)  Insured will be expected to know such confidential information that is known only to an 
individual who is,— 
 
(a)  an agent of the insured, or any employee of such agent; or 
 
(b)  the information was acquired by such agent or his employee, througl a business 
relationship with a person who is not connected with the contract of Marine 
Insurance. 
 
(5)  For the purpose of sub -clause (4), the persons conne cted with a  contract of Marine 
Insurance are,— 
 
(a)  the insured or any other person for whom cover is provided by the contract; and 
 
(b)  If the contract re-insures risks covered by another contract, the persons who are, 
by virtue of this sub-clause, connected with that other contract. 
 
(6)  In the absence of an inquiry, sub-clause (2) does not require the insured to disclose a 
circumstance if,— 
 
(a)  It diminishes the risk; or 
 
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(b)  The insurer knows it; or 
 
(c)  The insurer ought to know it; or 
 
(d)  The insured is presumed to know it; or 
 
(e)  It is something as to which information is waived by the insurer. 
 
20. Knowledge of insurer. — (I) For the purposes of sub -section19(6(b), an insurer knows 
something only if it is known to one or more of the individuals who participate on behalf of the insurer 
in the decision whether to take the risk, and if so, on what terms whether the individual does so as, the 
insurer's employee or agent, as an employee of the insurer's agent or in any other capacity. 
 
(2)  For the purposes of section 19(6)(c), an insurer ought to know something only if,— 
 
(a)  an employee or agent of the insurer knows it, and ought reasonably to have 
passed on the relevant information to an individual mentioned in sub-section (l), 
or 
 
(b)  the relevant information is held by the insurer and is readily available to an 
individual mentioned in sub-section (1). 
 
(3)  For the purposes of section 19(6)(d), an insurer is presumed to know,— 
 
(a)  things which are common knowledge; and 
 
(b)  things which an insurer offering insurance of the class in question to insured in 
the field of activity in question would reasonably be expected to know in the 
ordinary course of business. 
 
21.  Remedies for breach.— (1) The insurer has a remedy against the insured for a breach of 
the duty of fair presentation only if the insurer shows that, but for the breach, the insurer,— 
 
(a)  would not have entered into the contract of insurance at all; or 
 
(b)  would have done so only on different terms. 
 
(2)  If a qualifying breach was deliberate, the insurer; 
 
(a)  may by notice to the insured, treat the contract of marine insurance as having 
been terminated with effect from the time when the variation was made; and 
 
(b)  need not return any of the premium paid. 
 
(3)  If a qualifying breach was neither deliberate nor reckless, then  either of the following 
remedies shall be available to the insurer,— 
 
 
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(a) if the insurer can show that it would not have entered into the marine insurance 
contract on any terms, it will be able to avoid the contract and refuse to pay 
claims but will have to return the premium; 
 
(b)  the insurer may review and vary the marine insurance policy in the light of such 
breach and the said marine insurance policy shall then be treated as if it had 
been written on those terms from the outset; 
  
(c)  If the insurer can show that the different terms would have reduced or removed 
his liability for claims already paid, then an insured may need to reimburse the 
insurer accordingly; 
 
(d)  In other cases, instead of charg ing an additional premium, the insurer may be 
able to reduce claims' payments proportionately. 
 
22. When contract is deemed to be concluded.— A contract of marine insurance is deemed 
to be concluded when the proposal of the insured 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 or covering note or other customary memorandum of the contract. 
 
CHAPTER-VI 
 
THE POLICY 
 
23.  Contract must be embodied in policy.— Subject to the provisions of this Act, a contract 
of marine insurance is in-admissible 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. 
 
24. What policy must specify.— A marine policy must specify the name of the insured or of 
some person who effects the insurance on his behalf. 
 
25.  Signature of insurer.— (1) A marine policy must be signed by or on behalf of the insurer, 
provided that in the case of a corporation the corporate seal may be sufficient, but nothing in this 
section shall be construed as requiring the subscription of a corporation to be under seal. 
 
(2)  Where a policy is subscribed by or on behalf of two or more insurers, each subscription, 
unless the contrary be expressed, constitutes a distinct contract with the assured. 
 
26. Voyage and time policies.— (1) Where the contract is to insure the subject-matter “at and 
from”, or from one place to another or others, the policy is called a “voyage policy” and where the 
contract is to insure the subject-matter for a definite period of time the policy is called a “time policy'. 
A contract for both voyage and time may be included in the same policy. 
 
(2)  Notwithstanding anything in sub-section I above, a contract of marine Takaful shall be for 
a stated period of time with an express stipulation to the effect that the benefits under the said marine 
Takaful contract shall cease on arrival of the subject-matter of Takaful on destination, or earlier in case 
of frustration of the maritime venture. 
 
 
 
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27.  Designation of 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 insured 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 insured 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. 
 
28.  Valued policy.— (l) 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 the insured, 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. 
 
29.  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 herein before specified. 
 
30.  Floating policy by ship or ships.— (1) A floating policy is a policy which describes the 
insurance in general terms and leaves the name 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. 
 
31.  Construction of terms in policy. — Subject to the pr ovisions of this Act and unless the 
context of the policy otherwise requires, the terms and expressions mentioned in the Schedule to this 
Act shall be construed as having the scope and meaning in that Schedule assigned to them. 
 
32. 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. 
 
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(2)  Where an insurance is effected on the terms that an additional premium is to be arranged 
in a given event and that event happ ens but no arrangement is made, then a reasonable additional 
premium is payable. 
 
CHAPTER-VII 
 
DOUBLE INSURANCE 
 
33.  Double insurance.— (1) Where two or more policies are effected by or on behalf of the 
insured on the same adventure and interest or any pa rt thereof and the sums insured exceed the 
indemnity allowed by this Act, the insured is said to be over-insured by double insurance. 
 
(2)  Where the insured is over-insured by double insurance,— 
 
(a)   the insured, 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 insured claims is a valued policy, the insured 
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 insured claims is an unvalued policy he shall 
give credit, as against the full insurable value, for any sum received by him 
under any other policy; and 
 
(d)  where the insured 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. 
 
CHAPTER-VIII 
 
WARRANTIES 
 
34. 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 insured undertakes that some 
particular thing shall or shall not be done or that some condition shall be fulfilled or whereby he affirms 
or negates the existence of a particular state of facts. 
 
(2)  A warranty may be express or implied. 
 
(3)  A warranty, as defined in sub -section (1), 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. 
 
(4)  Notwithstanding anything to the contrary that pertains to warranties in this Act, no 
representation made by the insured is capable of being converted into a warranty by means of any 
provision of marine insurance contract, nor shall any such representation be declared to form the basis 
of marine insurance contract. 
 
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35.  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)  A breach of warranty may be waived by the insurer. 
 
36.  Express warranty.— (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 an implied warranty, unless it be inconsistent 
therewith. 
 
37.  Warranty of neutrality. — (1) Where insurable property, whether ship or goods, is 
expressly warranted neutral, there is an implied con dition that the property shall have a neutral 
character at the commencement of the risk and that so far as the insured 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 insured 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. 
 
38.  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. 
 
39.  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. 
 
40.  Warranty of seaworthiness of ship.— (l) 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 war ranty 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 f urther 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 is deemed to be seaworthy when she is reason ably fit in all respects to encounter 
the ordinary perils of the seas of the adventure insured. 
 
 
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(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. 
 
41. No implied warranty that goods are seaworthy. — (1) In a policy on goods or other 
movables 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. 
 
42.  Warranty of legality.— There is an implied warranty that the adventure insured is a lawful 
one and that, so far as the insured can control the matter, the adventure shall be carried out in a lawful 
manner. 
CHAPTER-IX 
 
THE VOYAGE 
 
43.  Implied condition 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 t he contract is concluded, but there is an implied condition that the 
adventure shall be commenced within a reasonable time and that if the adventure be not so commenced 
the insurer may avoid the contract, 
 
(2)  The implied condition may be negatived by sho wing that the delay was caused by 
circumstances known to the insurer before the contract was concluded or by showing that he waived 
the condition. 
 
44.  Alteration of port of departure.— Where the place of departure is specified by the policy 
and the ship, instead of sailing from that place, sails from any other place the risk does not attach. 
 
45.  Sailing for different destination.— Where the destination is specified in the policy and 
the ship, instead of sailing for that destination, sails for any other destination the risk does not attach. 
 
46.  Change of voyage.— (1) Where, after the commencement of the risk, the destination of 
the ship is voluntarily changed from the destination contemplated by the policy, there is said to be a 
change of voyage. 
 
(2)  Unless the policy otherwise provides, where there is a change of voyage, the insurer is 
discharged from liability as from the time of the change, that is to say, as from the time when the 
determination to change it is manifested and it is immaterial that the ship may not have left the course 
of voyage contemplated by the policy when the loss occurs. 
 
47. Deviation. — (1) Where a ship, without lawful excuse, deviates from the voyage 
contemplated by the policy, the insurer is discharged from liability as from  the time of deviation and 
it is immaterial that the ship may have regained her route before any loss occurs. 
 
(2)  There is a deviation from the voyage contemplated by the policy, 
 
 
Page 18 of 31 
 
(a)  where the course of the voyage is specifically designated by the policy and that 
course is departed from; or 
 
(b)  where the course of the voyage is not specifically designated by the policy, but 
the usual and customary course is departed from. 
 
(3)  The intention to deviate is immaterial, there must be a deviation in fact to discharge the 
insurer from his liability under the contract. 
 
48.  Several ports of discharge. — (1) Where several ports of discharge are specified by the 
policy, the ship may proceed to all or any of them but, in the absence of any usage or sufficient cause 
to the contrary, she must proceed to them or such of them as she goes to in the order designated by the 
policy. If she does not, there is a deviation. 
 
(2)  Where the policy is to “ports of discharge”, within a given area, which are not named, the 
ship must, in the absence of any usage or sufficient cause to the contrary, proceed to them or such of 
them as she goes to in their geo-graphical order. If she does not, there is a deviation. 
 
49.  Delay in voyage. — In the case of a voyage policy, the adventu re insured must be 
prosecuted throughout its course with reasonable dispatch and, if without lawful excuse it is 
not so prosecuted, the insurer is discharged from liability as from the time when the delay 
becomes un-reasonable.  
 
50. Excuses for deviation or delay. — (1) Deviation or delay in prosecuting the voyage 
contemplated by the policy is excused,— 
 
(a) where authorized by any special term in the policy; or 
 
(b)  where caused by circumstances beyond the control of the master and his 
employer; or 
 
(c)  where reasonably necessary in order to comply with an express or  implied 
warranty; or 
 
(d)  where reasonably necessary for the safety of the ship or subject matter insured; 
or 
 
(e)  for the purpose of saving human life or aiding a ship in distress  where human 
life may be in danger; or 
 
(f)  where reasonably necessary for the purpose of obtaining medical or surgical aid 
for any person on board the ship; or 
 
(g)  where caused by the barratrous conduct of the master or crew, if barratry be one 
of the perils insured against. 
 
(2)  When the cause excusing the deviation or delay ceases to operate, the ship must resume 
her course and prosecute her voyage with reasonable dispatch. 
CHAPTER-X 
 
 
Page 19 of 31 
 
ASSIGNMENT OF POLICY 
 
51.  When and how policy is assignable. (1) A marine policy is assignable unless it contains 
terms expressly prohibiting assignment. It may be assigned either before or after loss. 
 
(2)  Here a marine policy has been assigned so as to pass the beneficial interest in such policy, 
the assignee of the policy is entitled to sue thereon in his own name and the defendant is entitled to 
make any defense arising out of the contract which he would have been entitled to make if the action 
had been brought in the name of the person by or on behalf of whom the policy was effected. 
 
(3)  A marine policy may be assigned by endorsement thereon or in other customary manner. 
 
52.  Insured who has no interest cannot assign.— Where the insured has parted with or lost 
his interest in the subject -matter insured and has not,  before or at the time of so doing, expressly or 
impliedly agreed to assign the policy any subsequent assignment of the policy is in-operative: 
 
Provided that nothing in this section affects the assignment of a policy after loss. 
 
CHAPTER-XI  
 
THE PREMIUM 
 
53.  When premium payable.— Unless otherwise agreed, the duty of the insured or his agent 
to pay the premium and the duty of the insurer to issue the policy to the insured or his agent are 
concurrent conditions and the insurer is not bound to issue the policy until payment has been received. 
 
54. Policy effected through broker.— (1) Unless otherwise agreed, where a marine policy is 
effected on behalf of the insured by a broker, the broker is directly responsible to the insurer for the 
premium and the insurer is directly responsible to the insured for the amount which may be payable in 
respect of losses or in respect of returnable premium. 
 
(2)  Unless otherwise agreed, the broker has, as against the assured, a lien upon the policy for 
the amount of the premium and his charges in respect of effecting the policy and, where he has dealt 
with the person who employs him as a principal, he also have a lien on the policy in respect of any 
balance on any insurance account which may be due to him from such person, unless when the debt 
was incurred he had reason to believe that such person was only an agent. 
 
55. Effect of receipt on policy.— Where a marine policy effected on behalf of the insured by 
a broker acknowledges the receipt of the premium, such acknowledgement is, in the absence of fraud, 
conclusive as between the insurer and the insured but not as between the insurer and broker. 
 
CHAPTER-XII 
 
LOSS AND ABANDONMENT 
 
56.  Included and excluded losses.— (1) Subject to the provisions of this Act and unless the 
policy otherwis e provides, the insurer is liable for any loss proximately caused by a peril insured 
against but, subject as aforesaid, he is not liable for any loss which is not proximately caused by a peril 
insured against. 
 
 
Page 20 of 31 
 
(2)  In particular,— 
 
(a)  the insurer is not liable for any loss attributable to the willful misconduct of the 
insured but, unless the policy otherwise provides, he is liable for any loss 
proximately caused by a peril insured against, even though the loss would not 
have happened but for the misconduct or negligence of the master or crew; 
 
(b)  unless the policy otherwise provides, the insurer on ship or goods is not liable 
for any loss proximately caused by delay, although the delay be caused by a 
peril insured against; or 
 
(c)  unless the policy otherwise provides, the insurer is not liable for ordinary wear 
and tear, ordinary leakage and breakage, inherent vice or nature of the subject -
matter insured or for any loss proximately caused by rats or vermin or for any 
injury to machinery not proximately caused by maritime perils. 
 
57.  Partial and total loss. — (1) A loss may be either total or partial. Any loss other than a 
total loss, as hereinafter defined, is a partial loss. 
 
  (2)  A total loss may be either an actual total loss or a constructive loss. 
 
(3)  Unless a different intention appears from the terms of the policy, an insurance against total 
loss includes a constructive as well as an actual total loss. 
 
(4)  Where the insured brings an action for a total loss and the evidence proves only a part ial 
loss, he may, unless the policy otherwise provides, recover for a partial loss. 
 
(5)  Where goods reach their destination in specie but by reason of obliteration of marks or 
otherwise they are incapable of identification, the loss, if any, is partial and not total. 
 
58.  Actual total loss.— (1) Where the subject-matter insured is destroyed or so damaged as 
to cease to be a thing of the kind insured or where the insured is irretrievably deprived thereof, there 
is an actual total loss. 
 
(2)  In the case of an actual total loss notice of abandonment need not be given, 
 
59. Missing ship.—  Where the ship concerned in the adventure is missing and after the lapse 
of a reasonable time no news of her has been received an actual total loss may be presumed. 
 
60. Effect of transshipment, etc.— Where, by a peril insured against, the voyage is interrupted 
at any intermediate port or place, under such circumstances as apart from any special stipulation in the 
contract of affreightment, to justify the master in landing and re-shipping the goods or other movables 
or in transshipping them and sending them on to their destination, the liability of the insurer continues, 
notwithstanding the landing or transshipment. 
 
61.  Constructive total loss defined.— (1) Subject to any express provision in the policy, there 
is a constructive total loss where the subject-matter insured is reasonably abandoned on account of its 
actual total loss appearing to be unavoidable or because it could not be preserved from thc actual total 
loss without an expenditure which would exceed its value when the expenditure had been incurred. 
 
 
Page 21 of 31 
 
(2)  In particular, there is a constructive total loss,— 
 
(a)  where the insured is deprived of the possession of his ship or goods by a peril 
insured against and it is unlikely that he can recover the ship or goods, as the 
case may be, or the cost of recovering the ship or goods, as the case may be, 
would exceed their value when recovered;  
 
(b)  in the case of damage to a ship, where she is so damaged by a peril insu red 
against that the cost of repairing the damage would exceed the value of the ship 
when repaired; or 
 
(c)  in the case of damage to goods, where the cost of repairing the damage and 
forwarding the goods to the destination would exceed their value on arrival. 
 
(3) In estimating the cost of repairs, no deduction shall be made in respect of general average 
contributions to those repairs payable by other interests, but account shall be taken of the expense of 
future salvage operations and of any future genera l average contributions to which the ship would be 
liable if repaired. 
 
62.   Effect of constructive total loss. — Where there is a constructive total loss the insured 
may either treat the loss as a partial loss or abandon the subject-matter insured to the insurer and treat 
the loss as if it were an actual total loss. 
 
63.  Notice of abandonment.— (1) Subject to the provisions of this section, where the insured 
elects to abandon the subject-matter insured to the insurer he shall give notice of the abandonment. If 
he fails to do so, the loss can only be treated as a partial loss. 
 
(2)  Notice of abandonment may be given in writing or by word of mouth or partly in writing 
and partly by word of mouth and may be given in terms which indicate the intention of the insured to 
abandon his insured interest in the subject-matter insured un-conditionally to the insurer. 
 
(3)  Notice of abandonment must be given with reasonable diligence after the receipt of reliable 
information of the loss, but where the information is of a doubtful character the insured is entitled to a 
reasonable time to make query. 
 
(4)  Where notice of abandonment is properly given, the rights of the insured shall not be 
prejudiced by the fact that the insurer refuses to accept the abandonment. 
 
(5)  The acceptance of an abandonment may be either express or implied from the conduct of 
the insurer. The mere silence of the insurer after notice is not an acceptance. 
 
(6)  Where a notice of abandonment is accepted the abandonment is irrevocable. The 
acceptance of the notice shall conclusively admit liability for the loss and the sufficiency of the notice. 
 
(7)  Notice of abandonment is un -necessary where, at the time when the insured receives 
information of the loss, there would be no possibility of benefit  to the insurer if notice were given to 
him. 
(8)  Notice of abandonment may be waived by the insurer. 
  
(9)  Where an insurer has reinsured his risk, notice of abandonment need not be given by him. 
 
Page 22 of 31 
 
 
64.  Effect of Abandonment.— (1) Where there is a valid abandonment the insurer is entitled 
to take over the interest of the insured in whatever may remain of the subject-matter insured and all 
proprietary rights incidental thereto. 
 
(2)  Upon the abandonment of a ship, the insurer thereof is entitled to any fre ight in course of 
being earned and which is earned by her subsequent to the casualty causing the loss, less the expenses 
of earning it incurred after the casualty and, where a ship is carrying the owner's goods, the insurer 
shall be entitled to a reasonabl e remuneration for the carriage of them subsequent to the casualty 
causing the loss. 
 
CHAPTER-XIII 
 
PARTIAL LOSSES INCLUDING SALVAGE, GENERAL AVERAGE AND PARTICULAR 
CHARGES 
 
65. Particular average loss. — (1) A particular average loss is a partia l loss of the subject -
matter insured caused by a peril insured against and which is not a general average loss. 
 
(2)  Expenses incurred by or on behalf of the insured for the safety or preservation of the 
subject-matter insured, other than general average and salvage charges, are called particular charges. 
Particular charges are not included in particular average. 
 
66. Salvage charges. — (1) Subject to any express provision in the policy, salvage charges 
incurred in preventing a loss by perils insured against may be recovered as a loss by those perils. 
 
(2)  For the purpose of this section, the expression “salvage charges means the charges 
recoverable under maritime law by a salvor independently of contract. They do not include the 
expenses of services in the  nature of salvage rendered by the insured or his agents or any person 
employed for hire by them for the purpose of averting a peril insured against. Such expenses, where 
properly incurred, may be recovered as particular charges or as a general average loss according to the 
circumstances under which they were incurred. 
 
67.  General average loss. — (1) A general average loss is a loss caused  by or directly 
consequential on a general average act. It includes a general  average expenditure as well as a general 
average sacrifice. 
 
(2) There is a general average act where any extraordinary sacrifice or expenditure is 
voluntarily and reasonably made or incurred in the time of peril for the purpose of preserving the 
property imperiled in the common adventure. 
 
(3)  Where there is a general average loss, the party on whom it falls is entitled, subject to the 
conditions imposed by maritime law, to a ratable contribution from the other parties interested and 
such contribution is called a general average contribution. 
 
(4)  Subject to any express provision in the policy, where the insured has incurred a general 
average expenditure he may recover from the insurer in respect of the proportion of the loss which 
falls upon him and in the case of a general average sacrifice he may recover from the insurer in respect 
of the whole loss without having enforced his right of contribution from the other parties liable to 
contribute. 
 
Page 23 of 31 
 
 
(5)  Subject to any express provision in the policy, where the insured has paid or is liable to 
pay a general average contribution in respect of the subject insured, he may recover therefore from the 
insurer. 
 
(6)  In the absence of express stipulation, the insurer is not liable for any general average loss 
or contribution where the loss was not incurred for the purpose of avoiding or in connection with the 
avoidance of a peril insured against. 
 
(7)  Where ship, freight and cargo or any two of those interests are owned by the same assured, 
the liability of the insurer in respect of general average losses o r contributions is to be determined as 
if those subjects were owned by different persons. 
 
CHAPTER-XIV 
 
MEASURE OF INDEMNITY 
 
68.  Extent of liability of insurer for loss. — (1) The sum, which the insured can recover in 
respect of a loss on a policy by which he is insured, in the case of an unvalued policy to the full extent 
of the insurable value or in the case of a valued policy to the full extent of the value fixed by the policy 
is called the measure of indemnity. 
 
(2)  Where there is a loss recoverable u nder the policy, the insurer or each insurer if there be 
more than one is liable for such proportion of measure of indemnity as the amount of his subscription 
bears to the value fixed by the policy in the case of a valued policy or to the insurable value in the case 
of an unvalued policy. 
 
69.  Total loss.— (1) Subject to the, provisions of this Act and to any express provision in the 
policy, where there is a total loss of the subject-matter insured,— 
 
 
(a)  if the policy be a valued policy, the measure of indemnity is the sum fixed by 
the policy; or 
 
(b)  if the policy be an unvalued policy, the measure of indemnity is the insurable 
value of the subject-matter insured 
 
70. Partial loss of ship. — Where a ship i s damaged but not totally lost the measure of 
indemnity, subject to any express provision in the policy, is as follows, namely.— 
 
(a)   Where the ship has been repaired, the insured is entitled to the reasonable cost 
of the repairs, less the customary deductions, but not exceeding the sum insured 
in respect of any one casualty; 
 
(b)  where the ship has been only partially repaired, the insured is entitled to the 
reasonable cost of such repairs, computed as above and also to be indemnified 
for the reasonable depreciation, if any, arising from the unrepair ed damage, 
provided that the aggregate amount shall not exceed the cost of repairing the 
whole damage computed as above; or 
 
 
Page 24 of 31 
 
(c)  where the ship has not been repaired and has not been sold in her damaged state 
during the risk, the insured is entitled to be  indemnified for the reasonable 
depreciation arising from the unrepaired damage, but not exceeding the 
reasonable cost of repairing such damage computed as above. 
 
71.  Partial loss of freight.— Subject to any express provision in the policy, where there i s a 
partial loss of freight the measure of indemnity is such proportion of the sum fixed by the policy in the 
case of a valued policy or of the insurable value in the case of an unvalued policy, as the proportion of 
freight lost by the insured bears to the whole freight at the risk of the insured under the policy. 
 
72.  Partial loss of goods, merchandise etc .— (1) Where there is a partial loss of goods, 
merchandise or other movables, the measure of indemnity, subject to any express provision in the 
policy, is as follows, namely:— 
 
(a)  where part of the goods, merchandise or other movables insured by a valued 
policy is totally lost, the measure of indemnity is such proportion of the sum 
fixed by the policy as the insurable value of the part lost bears to the  insurable 
value of the whole ascertained as in the case of an unvalued policy; 
 
(b)  where part of the goods, merchandise or other movables insured by an unvalued 
policy is totally lost the measure of indemnity is the insurable value of the part 
lost ascertained as in the case of total loss; and 
 
(c)  where the whole or any part of the goods or merchandise insured has been 
delivered as damaged at its destination, the measure of indemnity is such 
proportion of the sum fixed by the policy in the case of a valued policy or of the 
insurable value in the case of an unvalued policy, as the difference between the 
gross sound and damaged values at the place of arrival bears to the gross sound 
value. 
 
(2)  For the purposes of this section, the expression “gross value” means the wholesale price 
or. if there be no such price, the estimated value with, in either case, freight, landing charges and duty 
paid beforehand provided that in the case of goods or merchandise customarily sold in bond the bonded 
price is deemed to be the gross value and “gross proceeds” means the actual price obtained at a sale, 
where all charges on sale are paid by the sellers. 
 
73.  Apportionment of valuation.— (1) Where different species of property are insured under 
a single valuation, the valu ation must be apportioned over the different species in proportion to their 
respective insurable values, as in the case of an unvalued policy. The insured value of any part of 
aspecies is such proportion of the total insured value of the same as the insura ble value of the  part 
bears to the insurable value of the whole, ascertained in both cases as provided by this Act. 
 
(2)  Where a valuation has to be apportioned and particulars of the prime cost of each separate 
species, quality or description of goods ca nnot be ascertained, the division of the valuation may be 
made over the net arrived sound values of the different species, qualities or descriptions of goods. 
 
74.  General average contributions and salvage charges. —(1) Subject to any express 
provision in the policy, where the insured has paid or is liable for any general average contribution, 
the measure of indemnity is the full amount of such contribution, if the subject -matter liable to 
contribution is insured for its full contributory value but if such subject-matter be not insured for its 
 
Page 25 of 31 
 
full contributory value or if only part of it be insured, the indemnity payable by the insurer must be 
reduced in proportion to the under insurance and where there has been a particular average loss which 
constitutes a deduction from the contributory value and for which the insurer is liable that amount must 
be deducted from the insured value in order to ascertain what the insurer is liable to contribute. 
 
(2)  Where the insurer is liable for salvage charges the extent of his liability must be determined 
on the like principle. 
 
75.  Liabilities to third parties.— Where the insured has effected an insurance in express 
terms against any liability to a third party, the measure of indemnity, subject to any express provision 
in the policy, is the amount paid or payable by himto such third party in respect of such liability. 
 
76.  General provisions as to m easure of indemnity. —(1) Where there has been a loss in 
respect of any subject -matter not expressly provided for in the for egoing provisions of this Act, the 
measure of indemnity shall be ascertained as nearly as may be in accordance with those provisions in 
so far as applicable to the particular case. 
 
(2)  Nothing in the provisions of this Act relating to the measure of inde mnity shall affect the 
rules and provisions relating to double insurance or prohibit the insurer from disproving interest wholly 
or in part or from showing that at the time of the loss the whole or any part of the subject-matter insured 
was not at risk under the policy. 
 
77.  Particular average warranties.— (1) Where the subject-matter insured is warranted free 
from particular average, the insured cannot recover for a loss of part, other than a loss incurred by a 
general average sacrifice, unless the contra ct contained in the policy be apportionable but, if the 
contract be apportionable, the insured may recover for a total loss of any apportionable part. 
 
(2)  Where the subject-matter insured is warranted free from particular average, either wholly 
or under a certain percentage, the insurer is nevertheless liable for salvage charges and for particular 
charges and other expenses properly incurred pursuant to the provisions of the suing and labouring 
clause in order to avert a loss insured against. 
 
(3)  Unless the policy otherwise provides, where the subject -matter is warranted free from 
particular average under a specified percentage, a general average loss cannot be added to a particular 
average loss to make up the specified percentage. 
 
(4)  For the purpose of ascertaining whether the specified percentage has been reached, regard 
shall be had only to the actual loss suffered by the subject-matter insured. Particular charges and the 
expenses of and incidental to ascertaining and proving the loss must be excluded. 
 
78.  Successive losses.— (1) Unless the policy otherwise provides and subject to the provisions 
of this Act, the insurer is liable for successive losses even though the total amount of such losses may 
exceed the sum insured. 
 
(2)  Where under the same policy, a partial loss, which has not been repaired or otherwise made 
good, is followed by a total loss, the insured can only recover in respect of the total loss: 
 
Provided that nothing in this section shall affect the liability of the insurer under the suing and 
laboring clause. 
 
 
Page 26 of 31 
 
79.  Suing and laboring clause.—(1) Where the policy contains a suing and laboring clause, 
the engagement thereby entered into is deemed to be supplementary to the contract of insurance and 
the insured may recover from the insur er any expenses properly incurred pursuant to the clause, 
notwithstanding that the insurer may have paid for a total loss or that the subject-matter may have been 
warranted free from particular average, either wholly or under a certain percentage. 
 
(2)  General average losses and contributions and salvage charges, as defined by this Act, are 
not recoverable under the suing and laboring clause. 
 
(3)  Expenses incurred for the purpose of averting or diminishing any loss not covered by the 
policy are not recoverable under the suing and laboring clause. 
 
(4)  It is the duty of the insured and his agents, in all cases, to take such  measures as may be 
reasonable for the purpose of averting or minimizing a loss. 
 
CHAPTER-XV 
 
RIGHTS OF INSURER ON PAYMENT 
  
80. Right of subrogation.— (1) Where the insurer pays for a total loss, either of the whole or, 
in the case of goods of any apportion able part, of the subject-matter insured, he thereupon become 
entitled to take over the interest of the insured in whatever may rem ain of the subject-matter so paid 
for and he is thereby subrogated to all the rights and remedies of the insured in and in respect of that 
subject-matter as from the time of the casualty causing the loss. 
 
(2)  Subject to sub-section (D), where the insurer pays for a partial loss, he acquires no title to 
the subject-matter insured or such part of it as may remain, but he is thereupon subrogated to all rights 
and remedies of the insured in and in respect of the subject -matter insured as from the time of the 
casualty causing the loss, in so far as the insured has been indemnified, according to this Act, by such 
payment for the loss. 
 
81. Right of contribution.— (1) Where the insured is over-insured by double insurance, each 
insurer is bound, as between himself  and the other insurers, to contribute ratably to the loss in 
proportion to the amount for which he is liable under his contract. 
 
(2)  If any insurer pays more than his proportion of the loss, he is entitled to maintain an action 
for contribution against the other insurers and is entitled to the like remedies as a surety who has paid 
more than his proportion of the debt. 
 
82. Effect of under insurance. — Where the insured is insured for an amount less than the 
insurable value or, in the case of a valued pol icy, for an amount less than the policy valuation, he is 
deemed to be his own insurer in respect of the un-insured balance. 
 
CHAPTER-XVI 
 
RETURN OF PREMIUM 
 
83. Enforcement of return.— Where the premium or a proportionate part thereof is, by this 
Act, declared to be returnable,— 
 
 
Page 27 of 31 
 
(a) if already paid, it may be recovered by the insured from the insurer; and 
 
(b) if unpaid, it may be retained by the insured or his agent. 
 
84. Return by agreement.— Where the policy contains a stipulation for the return of t he 
premium or a proportionate part thereof on the happening of a certain event and that event happens, 
the premium or, as the case may be, the proportionate part thereof, is thereupon returnable to the 
assured. 
 
85. Return for failure of consideration.— (1) Where the consideration for the payment of the 
premium totally fails and there has been no fraud or illegality on the part of the insured or his agents, 
the premium is thereupon returnable to the assured. 
 
(2)  Where the consideration for the payment of the premium is apportionable and there is a 
total failure of any apportionable part of the consideration, a proportionate part of the premium is, 
under the like conditions, thereupon returnable to the assured. 
 
(3)  In particular,— 
 
(a)  where the policy is void or is avoided by the insurer as from the commencement 
of the risk, the premium is returnable, provided  that there has been no fraud or 
illegality on the part of the assured, but if the risk is not apportionable and has 
once attached, the premium is not returnable; 
 
(b)  where the subject-matter insured or part thereof has never been imperiled, the 
premium or, as the case may be, a proportionate part thereof, is returnable: 
 
Provided that where the subject -matter has been insured “lost or not 
lost” and has arrived in safety at the time when the contract is concluded, the 
premium is not returnable unless, at such time, the insurer knew of the safe 
arrival; 
 
(c)  where the insured has no insurable interest throughout the currency of the risk, 
the premium is returnable, provided that this provision does not apply to a policy 
effected by way of gaming or wagering; 
 
(d)  where the insured has a defeasible interest which is terminated during the 
currency of the risk, the premium is not returnable; and 
 
(e)  where the insured has over-insured under an unvalued policy, a proportionate 
part of the premium is returnable. 
 
(4)  Subject to the foregoing provisions, where the insured has over• insured by double 
insurance, a proportionate part of the several premiums is returnable: 
 
Provided that, if the policies are effected at different times and any earlier policy has at any 
time borne the entire risk or if a claim has been paid on the policy in respect of the full sum insured 
thereby, no premium is returnable in respect of that policy and when the double insurance is effected 
knowingly by the insured no premium is returnable. 
 
 
Page 28 of 31 
 
CHAPTER-XVII 
 
MUTUAL INSURANCE 
 
86.  Modification of this Act in case of mutual insurance.— (1) Where two or more persons 
mutually agree to insure each other against marine losses there is said to be a mutual insurance. 
 
(2)  The provisions of this Act relating to the premium do not apply to mutual insurance, but a 
guarantee or such other arrangement as may be agreed upon may be substituted for the premium. 
 
(3)  The provisions of this Act, in so far as they may be modified by the agreement of the 
parties, may in the case of mutual insurance or cooperatives, be modified by the terms of the policies 
issued by the association or by the rules and regulations of the association. 
 
(4)  Subject to the exceptions mentioned in this section, the provisions of this Act apply to a 
mutual insurance as well as a cooperative insurance scheme. 
 
(5)  If an entity registered in Pakistan enters into a mutual insur ance arrangement with other 
local entities, their mutual insurance shall be registered as per the prevailing insurance laws. 
 
CHAPTER-XVIII 
 
SUPPLEMENTAL 
 
87.  Ratification by assured.— Where a contract of marine insurance is in good faith effected 
by one person on behalf of another, the person on whose behalf it is effected may ratify the contract 
even after he is aware of a loss. 
 
88.  Implied obligations varied by agreement or usage. — (1) Where any right, duty or 
liability would arise under a contract of  marine insurance by implication of law, it may be negatived 
or varied by express agreement or by usage, if the usage be such as to bind both parties to the contract. 
 
(2)  The provisions of this section extend to any right, duty or liability 
declared by this Act which may be lawfully modified by agreement. 
 
89.  Reasonable time, etc., a question of fact.— Where by this Act any reference is made to 
reasonable time, reasonable premium or reasonable diligence, the question what is reasonable is a 
question of fact. 
 
90.  Covering note as evidence.— Where there is a duly issued policy, reference may be made, 
as heretofore, to the slip or covering note in any legal proceeding. 
 
91.  Certain provisions to override the Transfer of Property Act 1882.— Nothing in clause 
(e) of section 6 of the Transfer of Property Ac t, 1882 (IV of 1882), shall affect the provisions of  
sections 16, 51, 52 and 80. 
 
92.  Repeal.—(1) Sections 130A and 135A of the Transfer of Property Act, 1882 (IV of 1882), 
are hereby repealed. 
 
 
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(2)  The rules of the common law including the law merchant, save in so far as they are not 
inconsistent with the express provisions of this Act, shall continue to apply to contracts of marine 
insurance. 
 
93.  Power to issue directives, circulars, guidelines.  The Minister in-Charge shall have the 
power to issue such directives, codes, guidelines, circulars or notifications as are necessary to carry 
out the purposes of this Act. 
 
94.  Power to make Rules. — The Federal Government may, by notification in the official 
Gazette, make such rules as may be necessary to carry out the purposes of this Act. 
 
95.  Power to make Regulations. — (1) The Commission may, by notification in the official 
Gazette, make such regulations as may be necessary to carry out the purposes of this Aet: 
 
Provided that the power to make regulations conferred by this clause shall be subject to the 
condition of previous publication and before making any regulations the draft thereof shall be 
published in the manner considered most appropriate by the C ommission for eliciting public opinion 
thereon within a period of not less than thirty days from the date of publication. 
 
(2)  Any regulation made under sub-section (I) may provide that a contravention thereof shall 
be punishable with a penalty which may extend to five million rupees and, where the contravention is 
a continuing one, with a further penalty which may extend to one hundred thousand rupees for every 
day after the first during which such contravention continues. 
 
96.  Savings.— Marine policies that are already in force shall continue to be governed under 
the prevailing law till their expiry. 
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SCHEDULE 
 
(see section 31) 
 
Rules for construction of policy 
 
The following are the rules referred to by this Act for the construction of a pol icy, where the 
context does not otherwise require, namely:— 
 
1. Where the subject -matter is insured “lost or not lost ” and the loss has occurred before the 
contract is concluded, the risk attaches, unless at such time the insured was aware of the loss and the 
insurer was not. 
 
2. Where the subject-matter is insured “from” a particular place, the risk shall not attach until 
the ship starts on the voyage insured. 
 
3. In the following circumstances,— 
 
(a)   where a ship is insured "at and from" a particular p lace and she is at that place 
in good safety when the contract is concluded; the risk attaches immediately. 
 
 
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(b)  if she be not at that place when the contract is concluded, the risk  attaches as 
soon as she arrives there in good safely and, unless the  policy othenvise 
provides, it is immaterial that she is covered by  another policy for a specified 
time after arrival. 
 
(c)   where chartered freight is insured "at and from" a particular place  and the ship 
is at that place in good safety when the contract is  concluded the risk attaches 
immediately. If she be not there when the contract is concluded, the risk attaches 
as soon as she arrives there in good safety. 
 
(d)   where freight, other than chartered freight, is payable without special conditions 
and is insured "at and from" a particular place, the risk attaches pro rata as the 
goods or merchandise are shipped,  provided that if there be cargo in readiness 
which belongs to the  ship owner or which some other person has contracted 
with him to ship, the risk atta ches as soon as He ship is ready to receive such  
cargo. 
 
 
4.  Where goods or other movables are insured “from the loading thereof, ” the risk does not 
attach until such goods or movables are actually on board and the insurer is not liable for them while 
in transit from shore to ship. 
 
5. Where the risk on goods or other movables continues until they are “safely landed” they 
must be landed in the customary manner and within a reasonable time after arrival at the port of 
discharge and if they are not so landed the risk cease. 
 
6.  In the absence of any further license or usage, the liberty to touch and stay “at any port or 
place whatsoever” does not authorize the ship to depart from the course of her voyage from the port 
of departure to the port of destination. 
 
7.  The expression “perils of the seas ” refers only to fortuitous accidents or casualties of the 
seas. It does not include the ordinary action of the winds and waves. 
 
8.  The expression “pirates” includes passengers who mutiny and rioters who attack the  ship 
from the shore. 
 
9.  The expression “thieves” does not cover clandestine theft or a theft committed by anyone 
of the ships company, whether crew or passengers. 
 
10.  The expression “arrests, etc., of kings, princes and people” refers to political or executive 
acts and does not include a loss caused by riot or by ordinary judicial process. 
 
11.  The expression “barratry” includes every wrongful aet willfully committed by the master 
or crew to the prejudice of the owner or, as the case may be, the charterer. 
 
12.  The expression “all other perils ” includes only perils similar in  kind to the perils 
specifically mentioned in the policy. 
 
13.  The expression “average unless general” means a partial loss of the subject-matter insured 
other than a general average loss and does not include “particular charges”. 
 
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14.  Where the ship has stranded, the insurer is liable for the expected losses although the loss 
is not attributable to the stranding, provided that when the stranding takes place the risk has attached  
and, if the policy be on goods, that the damaged goods are on board. 
 
15.  The term “ship” includes the hull, materials and outfit, stores and provisions for the officers 
and crew and, in the case of vessels engaged in a special trade, the ordinary fittin gs requisite for the 
trade and also, in the case of a steamship, the machinery, boilers and coals and engine stores, if owned 
by the assured. 
 
16.  The term “freight” includes the profit derivable by a shipowner from the employment of 
his ship to carry his own goods or moveable’s, as well as freight payable by a third party, but does not 
include passage money. 
 
17.  The term “goods” means goods in the nature of merchandise and does not include personal 
effects or provisions and stores for use on board. 
 
I8.  In the absence of any usage to the contrary, deck cargo and living animals must be insured 
specifically and not under the general denomination of goods. 
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