Marine Insurance Law

Running head: MARINE INSURANCE LAW
Marine Insurance Law
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Author Note

MARINE INSURANCE LAW1
1 (a)
The issue that arises from the given scenario is the issue of obligations and rights owned
by the insurer under contract of insurance which has been signed in agreement with Bora, that is,
whether the claims that are made by Bora can be seen as falling under the obligations of Bora’s
insurer, and whether or not certain rights of insurance are seen to have been breached under
contract of insurance. This all shall be addressed within the purview of English law. With the
aim of discussing the concerned issue, this essay shall address firstly all legal clauses that appear
to be relevant under the given circumstances. Attempts will be made to apply such legal clauses
or stipulations to the facts that are concerned with the case after which the paper will attempt to
draw a conclusion on the matter.
Legislations that govern English law and which pertain to marine insurance in particular
can be categorized under the umbrella of a single instrument known as Marine Insurance Act of
1906. 1Marine insurance is a term which has been defined with clarity under the first section of
this act2. Contractual agreement relating to the subject of marine insurance depicts that a contract
has been entered into by the insurance with the purpose of providing indemnity to assured parties
or party as provided under Section 5 of the Marine Act of 1906.3 The manner as well as the
extent to which this indemnity assurance is provided depends on what is agreed upon between
the assured and the insured. Areas to which the assurance is seen to extend are those that could
possibly include maritime losses, that is, the losses that arise out of marine adventure. Marine
1 The Marine Insurance Act 1906
2 The Marine Insurance Act 1906, s 1.
3 The Marine Insurance Act 1906, s 5.

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insurance can further be explained by alluding to the case entitled Beresford v Royal Insurance
– 1938'.4 In order to create a valid marine insurance contract, what is required, is that an
insurable interest exist. Insurable interest has been well defined under the section, that is, that a
person needs to have an equitable or legal right in relation to transportation of property through
marine adventure, with the destruction or damage of this property causing a loss to this person,
while the arrival of this property would generate benefits for demonstrating an interest in marine
adventures. An insurable interest must exist for individuals who have been issued for the availing
of a marine insurance policy. Marine insurance policies that do not have insurable interest
attached to them will be rendered void and shall not cover losses of any kind whatsoever.5
Insurer who has been engaged in the provision of assurance to assured party against
policy which has been procured or bought by assured relation to insurable interest shall be
conferred certain rights while being imposed with certain important obligations at the same given
time. Obligations that are imposed on insurance and which need to be extended urgently may be
termed as exercise of the concept of good faith. This perception of good faith as something that
can be construed as an obligation imposed upon insurance is something that has evolved
following the well-known court case entitled, SA v Ocean MI Co Ltd (The Dias) [1972] 2 QB
6256. It is important to note that that the idea of good faith as obligation is something which
needs to be ensured on the part of the insurer, and this can be applied to all types of insurance
contracts. Principles of good faith are codified further under section no. 17 of the Marine
Insurance Act of 1906.7 The concerned section requires marine insurance contracts to be based
on good faith and good feet, and both of these entities need to be given considerable importance
4 Beresford v Royal Insurance – 1938'
5 Owen, A. "The Law of Insurance Warranties: A Problem Incapable of Solution?." (2019).
6 SA v Ocean MI Co Ltd (The Dias) [1972] 2 QB 625
7 The Marine Insurance Act 1906, s 17

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when drawing up marine insurance contracts. The specific provision that is contained under this
particular section is one that requires both parties involved, that is the assured and the insured, to
ensure the exercise of good faith. Yet it needs to be remembered that the primary goal of this
particular section is to provide remedies to insurer as to prevention of misrepresentation which is
probably likely to be committed on the part of the policy holders. The section is also one that
requires policy holders to go ahead and furnish proper disclosures. Both prevention of
misrepresentation and disclosure of documents by policy holders is required by this section.,
prior to stage of contract. If policy holders are unable to furnish the required disclosures and are
seen to not be capable of exercising good faith, then the insurer will have every right to go ahead
and have the insurance contract repudiated. This is allowed because breach of good faith
requirement and breach of requirement of disclosure will be considered as breach of insurance
contract. The right however, that pertains to the insurer in relation to exercise of good faith on
the part of the assured is something that extends to policy holders as well. Policy holders are
conferred also with the right of being disclosed with material facts and have the right to be
assured of good faith being exercised on the part of the insurer. The insurer is therefore under the
obligation to make sure that the exercise of good faith is carried out when signing the insurance
contract with the assured party. The insurer is also required to extend what may be termed as
genuine representations to insured before entering into contractual agreement with the assured.8
What is more, the insurer is a person who is entitled to certain rights, that need to be
ensured with regard to payment. As provided under section 79 of Marine Insurance Act of
1906,9 insurer is a person who is conferred with the right to what may be termed as subrogation.
All rights, under this particular section, whether equitable or legal, in relation to insurable
8 Bugra, Aysegul. Insurance Law Implications of Delay in Maritime Transport. Informa Law from Routledge, 2017.
9 The Marine Insurance Act 1906, s 79