Average Clauses in the Policy.-We are now in a position to explain the clause previously referred to, which reads as follows:

Corn, fish, salt, saltpetre, fruit, flour, seeds, and all metals are warranted free from average; sugar, rice, tobacco, hemp, hides and skins are warranted free from average under five per cent.; and all other goods, also the ship and freight, are warranted free from average under three per cent., unless general, or the ship be stranded, sunk, or burnt. All liquids are warranted free from claims arising from leakage or breakage of the packages. (It will, of course, be understood that it is the insurer, not the underwriter, who makes this warranty.)

All the articles named in this clause are peculiarly susceptible of damage, either by sea water or by inherent causes. Therefore underwriters decline to insure corn, fish, salt, saltpetre, fruit, flour, seeds, or metals against particular average; and on sugar, rice, tobacco, hemp, flax, hides, and skins, will only pay particular average (even though insured against) when the damage amounts to not less than five per cent. of the insured value. On other goods, as well as on the ship and freight, the limit is three per cent.

It will be seen that under this clause a person might suffer a loss of some importance, and yet be unable to recover from the

underwriters. For example, a cargo of sugar, insured for £20,000, might be damaged to the extent of £950, which loss, being less than the stipulated five per cent., would be irrecoverable. In order to limit his liability for loss incurred in this manner, a merchant usually has inserted in his policies clauses such as the following:

"To pay average on every 50 bags, running landing numbers." (Sugar and coffee.)

"To pay average on every ten bales, running landing numbers." (Raw

cotton.)

"To pay average on each package as if separately insured." (Piece goods.)

This, in effect, reduces the value on which the percentage is calculated, or in other words, increases the percentage. It often happens that the damage, whilst not amounting to the required percentage on the whole, reaches the limit on one or more series.

CHAPTER XXI

MARINE INSURANCE-Continued

Total Loss.-There are two kinds of total loss, viz.: (1) an actual total loss, i.e., where the subject matter insured is destroyed or irreparably damaged, or is totally lost and irrecoverable; and (2) a constructive total loss, as, for example, where a ship is so damaged that the cost of repairing the damage would exceed the value of the ship when repaired.

Abandonment. When the insured has a claim for total loss he should without delay give notice thereof to the underwriters. This is usually done by a letter similar to the following:

at

"The steamer'

being reported to have been wrecked we hereby give you notice that we abandon to you our interest in the undermentioned goods shipped by the said steamer, and we claim from you payment of total loss in respect of your insurance for on the goods in question."

£

The underwriters will probably reply formally declining to accept the abandonment (in order to protect themselves in case the loss prove not to be a total loss), but the disclaimer does not affect their liability to pay the claim if the total loss can be legally established. In the meantime, the assured is at liberty under the policy to take steps to recover any portion of his property and sell it for the benefit of the parties concerned.

Re-insurance is a term used when an underwriter, in order to lessen his liability, insures with another party the whole or part of a risk he has undertaken. The re-insurance is effected on precisely the same terms as the original insurance, except that the premium may be either higher or lower. The policy usually states that the risk is a re-insurance.

Valued Policies.-We have already mentioned that the policy given on page 145 is called a valued policy, because the value of the goods insured is definitely stated, and there can therefore be no dispute as to the amount recoverable. There are, however, some other kinds of policies which must be mentioned.

Open Policies. An open policy (sometimes termed a "floating" policy) is one in which the value is not declared, and in case of loss under such a policy the loss (whether partial or total) would have to be proved. The principal object in taking out an 'open policy" is to cover goods which are in course of shipment, especially at a distant place, and which might possibly be lost before the complete declaration is made. The printed declaration and covering-note, as well as the policy itself, are the same as when the value is declared. The only difference is in the wording of some of the written portions, for example, instead of the name of the steamer the words "Steamer or steamers, warranted to sail before 31st December, 1898," might be inserted, and in place of "5 Cases Worsted Goods, valued at £220," the words "Five thousand pounds on manufactured goods to be hereafter declared and valued, to follow policy No.. ," might be inserted.

Another clause which is usually inserted in these policies is what is known as the "Continuation Clause," which runs thus: "In the event of declarations exceeding the amount open in this policy, it is hereby agreed to continue the same lines on the same terms for a like amount to follow."

Sometimes an open policy contains the "Deviation Clause,” which allows the vessel to deviate from the voyage specified, and still covers the insured at a premium to be arranged.

The following is a specimen of an "Open Policy":

No. 1,089.

Be it known that Dombey & Son,

No. 536,055. as well in their own Names, as for and in the Name and Names of all and every other Person or Persons, to whom the same doth, may, or shall appertain, in part or in All doth make Assurance and cause themselves, and them, and every of them to be insured, lost or not lost, at and from

the Mersey and London, both or either, to any port or ports in Spain,

or

or

inside the Straits of Gibraltar, and at and from thence by any inland conveyances to any place or places in the interior,

£2,000 including all risks by any conveyances whatsoever from the time of

leaving the Warehouse in the United Kingdom, until on board in craft to and from the Vessel or Vessels, of Lighters on the Rivers, or elsewhere, of Fire whilst waiting shipment in Docks, Warehouses, Hulks or elsewhere and in transit, of transhipment, of Steam Navigation, and all risks of every kind until safely delivered at the Warehouses of the Consignees, and including all liberties and exceptions as per Bills of Lading.

or

Upon any kind of Goods and Merchandises, and also upon the Body, Tackle, Apparel, Ordnance, Munition, Artillery, Boat, and other Furniture, of and in the good Ship or Vessel, called the

"Steamer or Steamers,” warranted to sail on or before 1st June, 1899.

whereof is Master, under God, for this present voyage,

or whosoever else shall go for Master in the said Ship, or by whatsoever other Name or Names the said Ship or the Master thereof is or shall be named or called, beginning the Adventure upon the said Goods and Merchandises from the loading thereof aboard the said Ship at as above

upon the said Ship, &c.

&c.

and so

shall continue and endure, during her abode there, upon the said Ship, And further, until the said Ship, with all her Ordnance, Tackle, Apparel, &c., and Goods and Merchandises whatsoever, shall be arrived at as above

upon the said Ship, &c., until she hath moored at Anchor Twentyfour Hours in good safety; and upon the Goods and Merchandises until the same be there discharged and safely landed. And it shall be lawful for the said Ship, &c., in this Voyage, to proceed and sail to and touch and stay at any Ports or Places whatsoever and wheresoever for any purposes necessary or otherwise, with leave to tow and assist vessels in all situations without being deemed any deviation and

without prejudice to this Insurance. The said Ship, &c., Goods and Merchandises, &c., for so much as concerns the Assured, by Agreement between the Assured and the Assurers in this Policy, are and shall be valued at

On Merchandise as Interest may appear, or be hereafter declared.

Value to include Invoice Cost, Charges and 12 per cent. advance thereon, or in accordance with instructions received from Consignees.

Average payable on each package separately, or as is customary, and General Average according to the Foreign Statement or York and Antwerp rules, 1890, as claimed

To follow and succeed Policy No. 534,053 for £2,000, dated 17th March, 1898.

and
or

and

or

Deviations change of Voyage transhipments not included in this Policy, and any inaccuracy in description of Voyage, interest, name of Vessel, clauses or conditions, to be held covered at a premium to be arranged.

or

It is hereby agreed that the declarations of Interest on this Policy shall attach in the order in which they are advised by the Assured, and in the event of Declarations exceeding the sum hereby insured, we agree to continue our respective Subscriptions on a Policy for a similar amount and at current rates, the latter clause alone excepted. Touching the events and Perils which we the Assurers are contented to bear, and do take upon us in this Voyage: they are of the Seas, Men-of-War, Fire, Enemies, Pirates, Rovers, Thieves, Jettisons, Letters of Mart and Counter Mart, Surprisals, Takings at Sea,