Page:The American Cyclopædia (1879) Volume IX.djvu/331

 INSURANCE 319 ty from the perils insured against, and not the local ones of the port or place, as unsafe moor- ing, &e. ; as otherwise it could not cease while she lies there. The insurers are answerable if the loss occurs after the policy expires, provi- ded it be the direct, immediate, and inevitable effect of an injury received at a time when the policy attached, from a peril insured against. The loss may be total or partial ; and a total loss may be actual or constructive. An actu- ally total loss occurs when the ship or goods are actually submerged, or destroyed by fire or some other peril, so that no part of them of any value survives and is recoverable. A con- structive total loss, or, as it is sometimes called, a technical total loss, is one in which valuable portions of the property survive, but are trans- ferred to the insurers by abandonment, so that the whole property passes out of the posses- sion of the insured, and the insurers pay for the whole, and hold the salvage (or property saved) as their own. By the established usage of this country, confirmed by abundant adju- dication, the insured has a right to abandon, and thus convert a partial loss into a total loss, whenever the partial loss exceeds one half of the value of the property insured. But our policies now generally contain the clause that there shall be abandonment only when the par- tial loss exceeds 50 per cent., estimated as a partial loss. This means, after a deduction of one third off. For it is one of the practical rules to which merchants have come, that in every case of partial loss one third shall be allowed as the benefit conferred by the new materials of repair ; or, in the common phrase, " one third off, new for old." Thus, if a new vessel sails to-day, and to-morrow loses her masts and rigging so as to require that all her top hamper should be replaced, and the insurers pay the cost of this, the owners gain nothing. But if the same ship, after spars and canvas are nearly worn out, meets with the same dis- aster, and new ones are supplied, and the in- surers pay the cost, the insured gains nearly all that he receives, for he lost very little by the disaster. Merchants and insurers, instead of trying to determine the proportion in each case, wisely conclude that the average, one third off, meets all cases fairly. Applying this to the case of constructive total loss, it is plain that a partial loss, to justify abandonment, must be more than 75 per cent. (For the loss of a ship by the sale of the master, in a case of strict necessity, see SHIPPING.) Whether the property insured be ship or cargo, it is the universal rule that a loss where anything is saved cannot be made total, excepting by trans- fer of salvage by abandonment to the insurers ; and the same rule applies to all claims, rights, or interests in, to, or about the property, re- maining in or accruing to the insured. Thus, if the insured lose by jettison or otherwise so as to acquire a claim to general average con- tribution, this claim must be transferred ; and if the insured have to pay a general average 434 VOL. ix. 21 contribution caused by a loss insured against, the insurers must repay it. (See AVERAGE, and SHIPPING.) There is no especial form of aban- donment ; but it must be made by the insured without any unnecessary delay, immediately upon learning the loss, and in terms distinctly indicating the fact of their loss, and their transfer of all salvage by abandonment, and their claim for a total loss. If the abandon- ment is accepted, it binds the insurers ; but if they refuse the acceptance, their refusal can- not impair the rights of the insured. II. IN- SURANCE AGAINST FIRE. The principles of fire insurance are the same with those of marine insurance, excepting so far as the nature of the property and of the risk causes a difference. It is only these differences that we need to present. Marine insurance is usually effected through a broker ; fire insurance usually by the party himself. He generally has to sign a for- mal application, and answer therein many ques- tions ; and the substantial truth of every answer would be taken as a condition precedent to any liability on the part of the insurers. It is com- mon to state in the application, or policy itself, that certain risks are "hazardous," and a scale of premiums is sometimes given for different classes of property ; and it is of extreme impor- tance that the insured should not deceive the insurers on this point. But there must bo a rational if not a liberal construction of all these rules. Thus, if " cotton in bales " is represent- ed as particularly "hazardous," a policy would not be avoided by the fact that a person insured upon a store and goods had one or two bales there for retail. So if " storing " certain goods demands an extra premium, having a small quantity for home consumption, or even for sale, does not come within the meaning of this clause. If the insured proposes to make any alteration in the premises insured, he should make this known to the insurers, and, if he can, obtain their leave in writing. But we ap- prehend that mere alterations, however expen- sive or important, do not of themselves avoid a policy, unless they are such that they increase the risk substantially. While the alterations are in progress, and a new risk exists from them, the underwriters are discharged from liability caused by a loss arising from this risk, but not, we think, if it arises from a cause wholly independent of the risk; and if the alterations are finished, and the risk not al- tered, they do not affect the insurance. It is usual to provide in the policy, or by the rules of the company, for making necessary or prop- er repairs. The law of warranty, of represen- tation, and of concealment, is much the same in fire insurance as in marine insurance. But some questions have arisen as to what part of a description is a continuing warranty. If ex- pressly prospective, as that water tanks shall be kept in an upper story, or a certain watch maintained, these of course are continuing promises, and a breach avoids or suspends the policy. So a description that the house is slated