Marine Insurance Law Case Study Assignment - University Name

This case study assignment addresses a marine insurance claim involving a commercial pleasure cruiser damaged in a collision. The analysis focuses on two key issues: whether the insurer can deduct a cash gift received by the policyholder from the settlement and the extent to which the insurer can exercise rights of recovery from a third party. The solution references the Marine Insurance Act 1906 and relevant case law, including Burnand v Rodocanachi and Asfar & Co. Ltd v Blundell, to justify the conclusions. The document examines the principles of indemnity, subrogation, and the impact of third-party contributions on claim settlements, offering a comprehensive understanding of marine insurance law and its practical application. The assignment provides a detailed analysis of the legal principles and their application to the given scenario.

Running head: CASE STUDY ASSIGNMENT
CASE STUDY ASSIGNMENT
Name of the Student:
Name of the University:
Author Note:

1CASE STUDY ASSIGNMENT
Answer 1:
Issue:
The issue that is to be discussed in the case study is whether the payment can be deducted
by the marine insurer which was made by the policy holder’s uncle from the settlement claim.
Rules:
Under the provisions of the Marine Insurance Act 1906, the insurer has the duty to
indemnify the insured person totally and the ownership of the insured item passes to the insurer
as per the process of subrogation. The insurer can cause the deduction of payment that is
received by the insured due to any insurance policy. Further, the insurer can deduct from 3rd
party to indemnify the insurer as per the principle of subrogation. The indemnity clause intends
to restore the financial position of the insured person to the state which the insured was before
the incident.
Under the provision of the common law if the insurer can prove that the cash gifts that
have been received by the insured person would be directly benefitting towards assisting his
financial position, the amount can be deducted from the final claim settlement. This type of
observation was made in the case Burnand v Rodocanachi [1882] 7 APP case 333 where it was
held by the House of Lords that the money received by the insured was purely a gift and hence
cannot be claimed by the insurers.

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Application:
Applying the principle of section 79 of the Marine Insurance Act 1906, it can be seen
that the insurer has the liability to indemnify the policy holder totally and the ownership of the
cruiser would be passing to the insurer as per the process of subrogation.
Applying the decision of the case Burnand v Rodocanachi [1882] 7 APP case 333 it can
be observed that the cash received by the insured from his uncle is purely a gift and hence it
cannot be deducted by the marine insurer.
Conclusion:
Hence, it can be inferred that the payment cannot be deducted by the marine insurer
which was made by the policy holder’s uncle from the settlement claim.
Answer 2:
Issue:
The issue that is needed to be analyzed in the current scenario is whether the marine
insurer can exercise the rights of recovery from the third party.
Rule
As per the provision of the common law and section 79 of the Marine Insurance Act
1906 the principle of subrogation can be seen to be providing that an insurer has a right for
seeking the recovery of payment for indemnity that was made to the insured person from any
third person who can be held liable for the loss. This observation can be seen in the decision of

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the case Asfar & Co. Ltd v Blundell [1896] 1 QB 123. The right of subrogation of an insurer can
only be seen to be arising only if the insurance is an indemnity contract. The insurer would have
no right in any life insurance or accident insurance case (Gurses 2015).
It can be observed that if the fault lies with the insured, the insurer would not have any
power for the exercise of the subrogation rights. However if it can be proved otherwise the
insurer would have the right of exercising subrogation from 3rd party for the indemnity paid.
Application:
Applying section 79 of the Marine Insurance Act 1906 to the situation it can be said that
the marine insurer has the right of seeking the recovery of payment for indemnity from a third
person who can be seen to be liable for the loss as was seen in the case Asfar & Co. Ltd v
Blundell [1896] 1 QB 123.
As the insured person in this case was not at fault the insurer has the subrogation right for
the indemnity paid from the third party.
Conclusion:
Thus it can be concluded that the rights of recovery can be exercised by the marine
insurer from the 3rd party.

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References:
Asfar & Co. Ltd v Blundell [1896] 1 QB 123
Burnand v Rodocanachi [1882] 7 APP case 333
Gurses, O., 2015. Marine Insurance Law. Routledge.
Hodges, S., 2013. Law of marine insurance. Routledge.
The Marine Insurance Act 1906.