Marine Insurance: Law and Practice
CHAPTER 13
INSURED RISKS
I GENERAL MATTERS
Introduction
13.1 The insurer is only liable to indemnify the assured for the loss which he has suffered if, on the true construction of the contract which they have actually concluded,1 (1) the loss is the consequence of an insured peril, (2) there is a sufficient nexus between that insured peril and the loss which has occurred, and (3) recovery is not subject to an exclusion. The second point, which depends on the application of the principles and rules of causation and proof of loss,2 and the third3 will be considered below. The first point will be considered here. It requires a determination of those perils which are covered by the policy in issue and a consideration of the circumstances comprehended by those specified perils. 13.2 The perils or risks4 which may be, or commonly are, covered by marine insurance policies may be grouped together in various ways, and those groupings may be altered, whether by persons who draft standard form documents or by parties to individual contracts. Most notably, the division between the risks included in the Lloyd’s SG policy,5 and versions of the various Institute clauses previously used to supplement that policy, have in practice virtually disappeared. Since the revision of the principal standard terms in the early 1980s, the basic division is between those risks in the basic hulls, cargo and freight clauses, which may conveniently be called marine risks,6 and the separate risks in discord (war and strikes) clauses.7 13.3 However, each policy must be examined individually. In particular, the marine risks are not identical in the various standard form sets of clauses, nor are they necessarily accorded identical treatment within a particular policy. Moreover, the policy may be altered to cater for special requirements of the parties. 13.4 Parties are free to insure against risks other than the basic marine and discord (war and strikes) risks: either by separate insurance, or by adding standard form or bespoke risks to a standard form policy; or by separate treatment of certain risks within a standard form policy. Four particular areas of risk, generally concerned with liabilities—namely, collision liabilities, pollution hazard, general average and salvage may appropriately be accorded individual treatment.8 13.5 It is convenient here to consider four aspects of the insurance of perils in the Institute hulls and freight clauses.The servant-owner term
13.6 The Institute hulls and freight perils clauses are divided into three parts. So effectively are the International Hull Clauses.9 The first provides for losses from marine perils and the second is the Inchmaree clause.10 Both of these parts are subject to the third,11 which deals with shipowners who fulfil a dual role—viz that of owners and that of certain specified persons who normally act in the service of shipowners. An identical provision appears as the last sentence of the pollution hazard clause.12 It may briefly and conveniently, if not conventionally, be called the servant-owner term. It states:“Master Officers Crew or Pilots not to be considered Owners within the meaning of [this Clause] should they hold shares in the Vessel.”