Page:The American Cyclopædia (1879) Volume IX.djvu/328

 316 INSURANCE the policy to assignees, the insurers are still held; and on the death of an insured, the property and policy go to his legal representa- tives. Whatever is written on the face or back of the policy, and is referred to in the policy as a part of it, becomes a part of it ; and so is a separate paper, if distinctly made a part by ref- erence which amounts to an agreement. Pol- icies which insure a person who has no interest in the property are called wager policies. They were formerly permitted, hut are not legal or valid now either here or in England ; it being a universal rule that the insured must have some interest in the property, and this interest must be at risk. If the policy is what is called an open policy, that is, if the interest he not valued therein, and a loss occurs, the insured proves his interest or the value of the property, and is paid accordingly. But the policy may be what is called a valued policy; that is, A may be insured "$10,000 on the ship Orion, valued at $20,000." This binds both parties, unless there be an over-valuation so extreme as to be fraudulent, or to he equivalent to a wager policy. If A is insured as above, and the ship is totally lost, he receives $10,000; but if the ship is partially lost, or injured to say one half of her value, then he receives $5,000; because by causing himself to be in- sured only half of her agreed value he is con- sidered as standing his own insurer for the other half. But if he be insured a round sum, without any valuation, he will receive the whole amount insured, provided he can show that he has lost so much by a peril insured against. The subjects of marine insurance are four : the ship, the cargo, the freight which the ship may earn, and the profits upon the cargo. Either may he valued ; but it is com- mon to value a ship, and not so common to value either of the other interests. If goods are valued, it is perhaps for the purpose of in- suring the profits, by including them in the valuation of the goods, without insuring the profits under that name. It is not very com- mon to insure profits by themselves ; hut when this is done, they are usually valued, although this is not necessary. If valued, and the goods are lost, the English courts require proof that they would have made some profit. In the United States the courts consider the loss of goods as implying the loss of some profits, and the valuation settles the amount. Any kind of interest will support an insurance, if it be such that a loss of the property will bring en the insured direct pecuniary loss. Any bailee of the property (or one having possession of it) may insure it if he have any interest in it or responsibility for it. If the property he mort- gaged, both mortgageor and mortgagee have an insurable interest in it; so have factors on commission (or commission merchants), con- signees, agents having possession, or carriers. The owner, of the ship acquires an insurable interest in the freight it will carry as soon as he has received the goods of another to be car- ried, or has purchased goods to be carried in his own ship, or has made a distinct and obli- gatory contract with some one to ship them, and his vessel is at or on the way to a port to receive them. The contract of insurance is wholly void if the interest insured is illegal ; or if a material and inseparable part of the contract or transaction is illegal ; or if it dis- tinctly contemplates an illegal use of that which is insured. But by illegal is meant contrary to the laws of the country where the contract is made and is to be enforced. Thus, an insurance in America, to cover goods intended to be smuggled into England, would not be void in America, but would be in Eng- land. Some contracts of insurance are pro- hibited by the mere policy of the law ; thus, a mariner cannot make a valid insurance of his wages, because it is important that he should feel the danger of losing them if the ship be lost. The subject of warranties in marine in- surance is very important. These are promises of the insured that certain things exist or do not exist, or shall be or shall not be done ; and if the promise is broken the contract is void, whether the promise is material or not, and whether the breach of the promise is the fault of the insured or not. And they must be ex- actly complied with, though the warranty will be construed reasonably, and according to the usage of merchants and insurers, and the hon- est and actual intention of the parties. The warranty may be express or implied by law. If express, it must be written on or in the policy, or by distinct reference made a part of it. Any distinct assertion amounts to a war- ranty ; if the ship be described as " the Ameri- can ship Flying Cloud," this is a warranty that she is American. Express warranties are most usually : 1, of ownership ; 2, of national char- acter; 3, of the lawfulness of the goods or voyage ; 4, of the taking of convoy ; 5, of the time of sailing. There are also some implied warranties ; but by far the most important of these is the universal warranty of seaworthi- ness. Every person who proposes to insurers to insure his ship, engages and warrants that his ship is in every respect in a safe and suita- ble condition to encounter all common perils and dangers on the voyage or in the place where she is to be while under insurance. The insurers may expressly waive this war- ranty, but this is very seldom done ; and wher- ever it exists, there it is a condition precedent to the obligations of the insurance ; that is to say, if this warranty be not performed or com- plied with, the insurance never attaches. The insurance is equally avoided by unseaworthi- ness, although this was unknown, and indeed could not be known, to the insured. Sea- worthiness requires reasonable soundness and strength in materials, and a full equipment of all appurtenances and implements which are necessary to the ship, with a proper master, officers, and crew, and proper papers. If the ship is seaworthy at the beginning, so that the