Marine Insurance Act

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Sections397

• 1Short title

  This Act may be cited as the Marine Insurance Act.

• 2Definitions
• 2(1)

  In this Act,

• 2(1)[p3]

  action includes a counterclaim and a set-off; (action)

• 2(1)[p4]

  contract means a contract of marine insurance as described in subsection 6(1); (contrat)

• 2(1)[p5]

  freight includes the profit derivable by a shipowner from the use of the shipowner’s ship to carry the shipowner’s goods or movables and freight payable by a third party, but does not include passenger fares; (fret)

• 2(1)[p6]

  goods means goods in the nature of merchandise, but does not include personal effects or provisions or stores for use on board a ship; (marchandises)

• 2(1)[p7]

  insurable property means any ship, goods or movables; (bien assurable)

• 2(1)[p8]

  marine adventure means any situation where insurable property is exposed to maritime perils, and includes any situation where

• 2(1)[p8](a)

  the earning or acquisition of any freight, commission, profit or other pecuniary benefit, or the security for any advance, loan or disbursement, is endangered by the exposure of insurable property to maritime perils, and

• 2(1)[p8](b)

  any liability to a third party may be incurred by the owner of, or other person interested in or responsible for, insurable property, by reason of maritime perils; (opérations maritimes)

• 2(1)[p11]

  marine policy means the instrument evidencing a contract; (police maritime)

• 2(1)[p12]

  maritime perils means the perils consequent on or incidental to navigation, including perils of the seas, fire, war perils, acts of pirates or thieves, captures, seizures, restraints, detainments of princes and peoples, jettisons, barratry and all other perils of a like kind and, in respect of a marine policy, any peril designated by the policy; (périls de mer)

• 2(1)[p13]

  movable means any movable tangible property, other than a ship or goods, and includes money, valuable securities and other documents; (bien mobilier)

• 2(1)[p14]

  ship includes the hull, machinery, materials and outfit and the stores and provisions for the officers and crew and also includes fuel, oils and engine stores, if they are owned by the insured, and, in the case of a ship engaged in a special trade, the ordinary fittings required for the trade. (navire)

• 2(2)Other terms

  The following terms have the meanings assigned by the provisions indicated beside them:

• 2(2)(a)

  actual total loss, subsection 56(1);

• 2(2)(b)

  constructive total loss, section 57;

• 2(2)(c)

  general average act, subsection 65(2);

• 2(2)(d)

  general average contribution, subsection 65(3);

• 2(2)(e)

  general average expenditure, subsection 65(2);

• 2(2)(f)

  general average loss, subsection 65(1);

• 2(2)(g)

  general average sacrifice, subsection 65(2);

• 2(2)(h)

  particular average loss, subsection 63(1);

• 2(2)(i)

  particular charges, subsection 63(2);

• 2(2)(j)

  salvage charges, subsection 64(1);

• 2(2)(k)

  time policy, subsection 29(3);

• 2(2)(l)

  unvalued policy, subsection 30(3);

• 2(2)(m)

  valued policy, subsection 30(2); and

• 2(2)(n)

  voyage policy, subsection 29(2).

• 3Construction of marine policies

  Subject to this Act and unless a contrary intention appears, the words and terms set out in the schedule have, when used in a marine policy, the meanings assigned by the schedule.

• 4Rules of Canadian maritime law

  The rules of Canadian maritime law continue to apply in respect of contracts, except in so far as the rules are inconsistent with this Act.

• 5Application

  This Act applies in respect of contracts concluded on or after the coming into force of this Act.

• 6Contract of marine insurance
• 6(1)

  A contract of marine insurance is a contract whereby the insurer undertakes to indemnify the insured, in the manner and to the extent agreed in the contract, against

• 6(1)(a)

  losses that are incidental to a marine adventure or an adventure analogous to a marine adventure, including losses arising from a land or air peril incidental to such an adventure if they are provided for in the contract or by usage of the trade; or

• 6(1)(b)

  losses that are incidental to the building, repair or launch of a ship.

• 6(2)Coverage

  Subject to this Act, any lawful marine adventure may be the subject of a contract.

• 7Insurable interest required
• 7(1)

  In order to recover under a contract for a loss, the insured must have an insurable interest in the subject-matter insured at the time of the loss, but need not have such an interest when the contract is concluded.

• 7(2)“Lost or not lost” insurance

  Notwithstanding subsection (1), where the subject-matter is insured “lost or not lost”, the insured may recover in respect of an insurable interest in the subject-matter acquired after a loss unless, at the time the contract was concluded, the insured was aware of the loss and the insurer was not.

• 7(3)Where no interest

  An insured who has no insurable interest in the subject-matter insured at the time of a loss cannot acquire an insurable interest by any act or election after becoming aware of the loss.

• 8Insurable interest - general principle
• 8(1)

  Subject to this Act, a person who has an interest in a marine adventure has an insurable interest.

• 8(2)Interest in marine adventure

  A person has an interest in a marine adventure if the person has a legal or equitable relation to the adventure, or to any insurable property at risk in the adventure, and may benefit from the safety or due arrival of insurable property, may be prejudiced by its loss, damage or detention or may incur liability in respect of it.

• 9Defeasible or contingent interests
• 9(1)

  A defeasible interest and a contingent interest are insurable interests.

• 9(2)Buyer of goods

  A buyer of goods who has insured them has an insurable interest even though the buyer might have elected to reject the goods or to treat them as at the seller’s risk for any reason, including a delay in delivering them.

• 10Partial interest

  A partial interest of any nature is an insurable interest.

• 11Master and crew’s wages

  The master and any member of the crew of a ship have insurable interests in their own wages.

• 12Advance freight

  A person who advances freight has an insurable interest, in so far as the freight is not repayable in case of loss.

• 13Charges of insurance

  An insured has an insurable interest in the charges for any insurance that the insured has effected.

• 14Reinsurance

  The insurer under a contract has an insurable interest in the risk insured and may reinsure in respect of it, but, unless the marine policy provides otherwise, the original insured has no right or interest in the reinsurance.

• 15Bottomry

  A lender of money on the security of a ship or a ship’s cargo has an insurable interest in respect of the loan.

• 16Quantum of mortgagor’s interest
• 16(1)

  A mortgagor of insurable property has an insurable interest in its full value, and the mortgagee has an insurable interest in any sum due or to become due under the mortgage.

• 16(2)Interest of mortgagee, consignee or other person

  A mortgagee, consignee or other person who has an insurable interest in the subject-matter insured may insure on the person’s own behalf, on behalf and for the benefit of any other interested person or both on the person’s own behalf and on behalf and for the benefit of any other interested person.

• 16(3)Quantum of owner’s interest

  The owner of insurable property has an insurable interest in its full value, even where a third person has agreed, or is liable, to indemnify the owner in case of loss.

• 17Assignment of interest
• 17(1)

  An insured who assigns or otherwise parts with an insurable interest in the subject-matter insured does not thereby transfer the rights of the insured under the contract, unless there is an express or implied agreement to that effect.

• 17(2)Exception

  Subsection (1) does not apply in respect of a transmission of interest by operation of law.

• 18Gaming or wagering contracts void
• 18(1)

  Every contract by way of gaming or wagering is void.

• 18(2)Presumption

  A contract is deemed to be a contract by way of gaming or wagering if

• 18(2)(a)

  the insured has no insurable interest within the meaning of this Act and the contract is concluded with no expectation of acquiring such an interest; or

• 18(2)(b)

  the marine policy is made “interest or no interest”, “without further proof of interest than the policy itself” or “without benefit of salvage to the insurer” or is subject to any other like term.

• 18(3)Exception

  Paragraph (2)(b) does not apply in respect of a marine policy that is made “without benefit of salvage to the insurer” or is subject to any other like term, if there is no possibility of salvage.

• 19Calculation of insurable value
• 19(1)

  Subject to any express provision of, or any value specified in, the marine policy, the insurable value of the subject-matter insured is

• 19(1)(a)

  in the case of insurance on a ship, the aggregate of the value of the ship at the commencement of the risk and the charges of insurance;

• 19(1)(b)

  in the case of insurance on freight, whether paid in advance or not, the aggregate of the gross amount of the freight at the risk of the insured and the charges of insurance;

• 19(1)(c)

  in the case of insurance on goods, the aggregate of the prime cost of the goods, the expenses of and incidental to shipping and the charges of insurance on those goods and expenses; and

• 19(1)(d)

  in the case of insurance on any other subject-matter, the aggregate of the amount at the risk of the insured when the policy attaches and the charges of insurance.

• 19(2)Value of ship

  For the purposes of paragraph (1)(a), the value of a ship includes money advanced for officers’ and crew’s wages and other disbursements incurred to make the ship fit for the marine adventure contemplated by the marine policy.

• 20Utmost good faith

  A contract is based on the utmost good faith and, if the utmost good faith is not observed by either party, the contract may be avoided by the other party.

• 21Disclosure by insured
• 21(1)

  Subject to this section, an insured must disclose to the insurer, before the contract is concluded, every material circumstance that is known to the insured.

• 21(2)Disclosure by agent of insured

  Subject to this section, an agent who effects insurance for an insured must disclose to the insurer, before the contract is concluded,

• 21(2)(a)

  every material circumstance that is known to the agent; and

• 21(2)(b)

  every material circumstance that the insured must disclose, unless the insured learned of it too late to communicate it to the agent.

• 21(3)Material circumstance

  A circumstance is material if it would influence the judgment of a prudent insurer in fixing the premium or determining whether to take the risk.

• 21(4)Question of fact

  Whether any circumstance that is not disclosed is material or not is a question of fact.

• 21(5)Circumstances not disclosed

  In the absence of any inquiry, the following circumstances need not be disclosed:

• 21(5)(a)

  any circumstance that diminishes the risk;

• 21(5)(b)

  any circumstance that is known to the insurer;

• 21(5)(c)

  any circumstance as to which information is waived by the insurer; and

• 21(5)(d)

  any circumstance the disclosure of which is superfluous by reason of any express warranty or implied warranty.

• 21(6)Presumptions

  For the purposes of this section,

• 21(6)(a)

  an insured is deemed to know every circumstance that, in the ordinary course of business, ought to be known by the insured;

• 21(6)(b)

  an agent is deemed to know every circumstance that, in the ordinary course of business, ought to be known by, or to have been communicated to, the agent; and

• 21(6)(c)

  an insurer is presumed to know circumstances of common notoriety and every circumstance that, in the ordinary course of an insurer’s business, ought to be known by an insurer.

• 21(7)Effect of non-disclosure

  If an insured or an agent of an insured fails to make a disclosure as required by this section, the insurer may avoid the contract.

• 21(8)Definition of “circumstance”

  In this section, circumstance includes any communication made to, or information received by, the insured.

• 22Representations by insured or agent
• 22(1)

  Every material representation made by the insured or the insured’s agent to the insurer during the negotiations for the contract and before the contract is concluded must be true.

• 22(2)Material representation

  A representation is material if it would influence the judgment of a prudent insurer in fixing the premium or determining whether to take the risk.

• 22(3)Question of fact

  Whether any representation is material or not is a question of fact.

• 22(4)Types of representations

  A representation may be as to a matter of fact or as to a matter of expectation or belief.

• 22(5)Fact

  A representation as to a matter of fact is deemed to be true if the difference between what is represented and what is actually correct would not be considered material by a prudent insurer.

• 22(6)Expectation or belief

  A representation as to a matter of expectation or belief is deemed to be true if it is made in good faith.

• 22(7)Withdrawal or correction

  A representation may be withdrawn or corrected before a contract is concluded.

• 22(8)Effect of false representations

  If any material representation made by the insured or the insured’s agent to the insurer during the negotiations for the contract is not true and is not withdrawn or corrected before the contract is concluded, the insurer may avoid the contract.

• 23When contract is deemed to be concluded

  A contract is deemed to be concluded when the proposal of the insured is accepted by the insurer, whether the marine policy is then issued or not, and for the purpose of establishing when the proposal is accepted, the slip or covering note or other customary memorandum of the contract may be referred to.

• 24Ratification

  A contract effected in good faith by a person on behalf of another person may be ratified by that other person even after the other person becomes aware of a loss.

• 25Marine policy required
• 25(1)

  A contract is inadmissible in evidence, unless it is evidenced by a marine policy in accordance with this Act.

• 25(2)Issue of marine policy

  A marine policy may be executed and issued when the contract is concluded or afterwards.

• 26Contents of marine policy

  A marine policy must specify

• 26(a)

  the name of the insured or of a person who effects the insurance on behalf of the insured;

• 26(b)

  the subject-matter insured;

• 26(c)

  the perils insured against;

• 26(d)

  the voyage or period, or both, covered by the insurance;

• 26(e)

  the sum insured; and

• 26(f)

  the name of the insurer.

• 27Signature of insurer
• 27(1)

  A marine policy must be signed by or on behalf of the insurer.

• 27(2)Exception

  Notwithstanding subsection (1), where the insurer is a corporation, the corporate seal is sufficient.

• 27(3)Subscription by two or more insurers

  Where a marine policy is subscribed by or on behalf of two or more insurers, each subscription, unless the contrary is expressed, constitutes a distinct contract with the insured.

• 28Specification of subject-matter
• 28(1)

  A marine policy must specify the subject-matter insured with reasonable certainty, but need not specify the nature and extent of the interest of the insured in that subject-matter.

• 28(2)Specification in general terms

  A marine policy that specifies the subject-matter insured in general terms shall be construed to apply to the interest intended by the insured to be covered.

• 28(3)Usage

  Any usage regulating the specification of the subject-matter insured shall be taken into consideration in applying this section.

• 29Voyage and time policies
• 29(1)

  A marine policy may be a voyage policy or a time policy.

• 29(2)Voyage policy

  A marine policy is a voyage policy if the contract insures the subject-matter “at and from”, or “from”, one place to another place or other places.

• 29(3)Time policy

  A marine policy is a time policy if the contract insures the subject-matter for a definite period.

• 29(4)Combined policies

  A marine policy may include a contract insuring the subject-matter as described in subsections (2) and (3).

• 30Valued and unvalued policies
• 30(1)

  A marine policy may be a valued policy or an unvalued policy.

• 30(2)Valued policy

  A marine policy is a valued policy if it specifies the agreed value of the subject-matter insured.

• 30(3)Unvalued policy

  A marine policy is an unvalued policy if it does not specify the value of the subject-matter insured and, subject to the limit of the sum insured, leaves the value to be determined in accordance with section 19.

• 30(4)Value specified

  Subject to this Act and in the absence of fraud, the value specified by a valued policy is, as between the insurer and the insured, conclusive of the insurable value of the subject-matter intended to be insured, regardless of whether any loss is a total loss or a partial loss.

• 30(5)Idem

  Unless a valued policy otherwise provides, the value specified by the policy is not conclusive for the purpose of determining whether there has been a constructive total loss.

• 31Floating policy
• 31(1)

  A marine policy may be a floating policy, that is to say, a policy that describes the insurance in general terms and leaves the name of the ship and other particulars to be defined by subsequent declarations, either by endorsement on the policy or in any other customary manner.

• 31(2)Declarations

  Unless a floating policy otherwise provides, declarations must be made in the order of dispatch or shipment and must, in the case of goods, include all consignments within the terms of the policy and honestly state the value of the goods.

• 31(3)Rectification

  An omission in a declaration or an erroneous declaration may be rectified even after loss or arrival if the omission or declaration was made in good faith.

• 31(4)Idem

  Unless a floating policy otherwise provides, where a declaration of value is not made until after notice of loss or arrival, the policy shall be treated as an unvalued policy with respect to the subject-matter of that declaration.

• 32Definition of “warranty”
• 32(1)

  In this section and sections 33 to 39, warranty means a promissory warranty by which the insured

• 32(1)(a)

  undertakes that some particular thing will or will not be done or that some condition will be fulfilled; or

• 32(1)(b)

  affirms or negates the existence of particular facts.

• 32(2)Types of warranty

  A warranty may be an express warranty or an implied warranty.

• 33Express warranties
• 33(1)

  An express warranty may be in any form of words from which the intention to warrant may be inferred.

• 33(2)Inclusion in policy

  An express warranty must be included in, or written on, the marine policy or be contained in a document incorporated by reference into the policy.

• 33(3)Exclusion of implied warranty

  An express warranty does not exclude an implied warranty, unless they are inconsistent.

• 34Warranty of legality

  There is an implied warranty in every marine policy that the marine adventure insured is lawful and, in so far as the insured has control, will be carried out in a lawful manner.

• 35No implied warranty of nationality

  There is no implied warranty in any marine policy as to the nationality of a ship or that the nationality of a ship will not be changed during the risk.

• 36Warranty of neutrality
• 36(1)

  Where in any marine policy insurable property is expressly warranted to be neutral, there is an implied condition in the policy

• 36(1)(a)

  that the property will have a neutral character at the commencement of the risk and that, in so far as the insured has control, that character will be preserved during the risk; and

• 36(1)(b)

  where the property is a ship, that, in so far as the insured has control, the papers necessary to establish the neutrality of the ship will be carried on the ship and will not be falsified or suppressed and no simulated papers will be used.

• 36(2)Breach of condition

  If any loss occurs through a breach of the implied condition referred to in paragraph (1)(b), the insurer may avoid the contract.

• 37Warranty of seaworthiness of ship in voyage policy
• 37(1)

  There is an implied warranty in every voyage policy that, at the commencement of the voyage, the ship will be seaworthy for the purpose of the particular marine adventure insured.

• 37(2)Warranty of fitness against perils of the port

  Where a voyage policy attaches while the ship is in port, there is an implied warranty in the policy that the ship will, at the commencement of the risk, be reasonably fit to encounter the ordinary perils of the port.

• 37(3)Warranty of fitness for each stage of voyage

  Where a voyage policy relates to a voyage performed in different stages during which the ship requires different or further preparation or equipment, there is an implied warranty in the policy that, at the commencement of each stage, the ship is seaworthy for the purposes of that stage.

• 37(4)No implied warranty of seaworthiness in time policy

  There is no implied warranty in any time policy that the ship will be seaworthy at any stage of the marine adventure, but where, with the privity of the insured, the ship is sent to sea in an unseaworthy state, the insurer is not liable for any loss attributable to unseaworthiness.

• 37(5)When ship deemed seaworthy

  A ship is deemed to be seaworthy if it is reasonably fit in all respects to encounter the ordinary perils of the seas of the marine adventure insured.

• 38No implied warranty that goods are seaworthy
• 38(1)

  There is no implied warranty in any marine policy on insurable property, other than a ship, that the insurable property is seaworthy.

• 38(2)Voyage policy on goods

  There is an implied warranty in every voyage policy on insurable property, other than a ship, that, at the commencement of the voyage, the ship is seaworthy and reasonably fit to carry the insurable property to the destination contemplated by the policy.

• 39Compliance with warranty
• 39(1)

  Subject to this section, a warranty must be exactly complied with, whether or not it is material to the risk.

• 39(2)Effect of breach of warranty

  Subject to any express provision in the marine policy or any waiver by the insurer, where a warranty is not exactly complied with, the breach of the warranty discharges the insurer from liability for any loss occurring on or after the date of the breach, but does not affect any liability incurred by the insurer before that date.

• 39(3)Breach of warranty of good safety

  A warranty that the subject-matter insured is “well” or “in good safety” on a particular day is not breached if the subject-matter is safe at any time during that day.

• 39(4)When breach of warranty excused

  A breach of a warranty is excused if, because of a change of circumstances, the warranty ceases to be applicable to the circumstances contemplated by the contract or if compliance with the warranty is rendered unlawful by any subsequent law.

• 39(5)Limit on defence to breach of warranty

  It is no defence to a breach of a warranty that the breach was remedied and the warranty complied with before any loss was incurred.

• 40Implied condition as to commencement
• 40(1)

  Where the subject-matter is insured by a voyage policy, the ship need not, when the contract is concluded, be at the place at and from, or from, which the subject-matter is insured, but there is an implied condition in the policy that the marine adventure will commence within a reasonable time and, if it is not so commenced, the insurer may avoid the contract.

• 40(2)Exception

  The implied condition may be negated by establishing that the delay was caused by circumstances known to the insurer before the contract was concluded or that the insurer waived the condition.

• 41Change of port of departure
• 41(1)

  Where the place of departure is specified by a marine policy and the ship sails from a different place, the risk does not attach.

• 41(2)Change of destination

  Where the destination is specified by a marine policy and the ship sails for a different destination, the risk does not attach.

• 42Change of voyage
• 42(1)

  Unless a marine policy otherwise provides, a change of voyage discharges the insurer from liability for any loss occurring on or after the time when the intention to change is manifested, whether or not the ship has in fact left the course of voyage contemplated by the policy when the loss occurs.

• 42(2)Idem

  There is a change of voyage where, after the commencement of the risk, the destination of the ship is voluntarily changed from that contemplated by the marine policy.

• 43Deviation from voyage
• 43(1)

  A deviation without lawful excuse from the voyage contemplated by a marine policy discharges the insurer from liability for any loss occurring on or after the time when the deviation occurs, regardless of the intention to deviate and whether or not the ship returns to its course of voyage before the loss occurs.

• 43(2)Idem

  There is a deviation from the voyage contemplated by a marine policy where

• 43(2)(a)

  the course of the voyage is specified by the policy and is departed from; or

• 43(2)(b)

  the course of the voyage is not specified by the policy but the usual and customary course is departed from.

• 43(3)Idem

  Where a marine policy specifies the ports of discharge, the ship may proceed to any or all of them, but if, in the absence of any usage or sufficient cause, the ship does not proceed to them, or such of them as it goes to, in the order specified, there is a deviation from the voyage contemplated by the policy.

• 43(4)Idem

  Where a marine policy specifies that the ports of discharge are within a given area and does not otherwise name them, the ship may proceed to any or all of them, but if, in the absence of any usage or sufficient cause, the ship does not proceed to them, or such of them as it goes to, in their geographical order, there is a deviation from the voyage contemplated by the policy.

• 44Delay in voyage

  The marine adventure insured by a voyage policy must be carried out with reasonable dispatch and a delay, without lawful excuse, in carrying it out discharges the insurer from liability for any loss occurring on or after the time when the delay becomes unreasonable.

• 45Excuses for deviation or delay
• 45(1)

  A deviation or delay referred to in section 43 or 44 is excused if it is

• 45(1)(a)

  authorized by any special term in the marine policy;

• 45(1)(b)

  caused by circumstances beyond the control of the master and the master’s employer;

• 45(1)(c)

  reasonably necessary in order to comply with an express warranty or an implied warranty;

• 45(1)(d)

  reasonably necessary for the safety of the ship or subject-matter insured;

• 45(1)(e)

  for the purpose of saving human life or aiding a ship in distress where human life may be in danger;

• 45(1)(f)

  reasonably necessary for the purpose of obtaining medical aid for any person on board the ship; or

• 45(1)(g)

  caused by the barratrous conduct of the master or crew, if barratry is one of the perils insured against.

• 45(2)Resumption

  When the excuse for a deviation or delay ceases, the voyage must be resumed with reasonable dispatch.

• 46Transhipment

  Where the voyage contemplated by a marine policy is interrupted, by a peril insured against, at an intermediate port or place in such circumstances as, apart from the contract of affreightment, justify the master in landing and reshipping, or transhipping, the goods or movables and sending them to their destination, the insurer continues to be liable for a loss occurring on or after the landing or transhipment.

• 47Premium to be arranged
• 47(1)

  A reasonable premium is payable if insurance is effected at a premium to be arranged and no arrangement is made.

• 47(2)Additional premium

  A reasonable additional premium is payable if insurance is effected on the terms that an additional premium is to be arranged on the happening of a given event and that event happens but no arrangement is made.