The importance of re-insurance can hardly be exaggerated. Without this chance of reducing the risk of their business activities many of the smaller insurance companies would soon disappear from the field. It happens that one insurance company has in force, at one time, over one hundred re-insurance contracts with other companies. A large risk is thus distributed sometimes among scores of companies. Sometimes underwriters agree to give their re-insurer a definite proportion of their business. This is called "share or participating re-insurance."

Re-insurance is often handled by so-called re-insurance pools. These are arrangements whereby a number of companies agree to share all insurance business on a given commodity or on all business within a given territory on the basis of certain agreed propositions. Such pools are for instance: the cotton re-insurance agreement, burlap agreement, joint grain certificate, etc.

1 Ibidem, p. 39f.

REFERENCES

HOUGH, B. O. Ocean Traffic and Trade. Chap. X. (1915). HUEBNER, S. S. The Status of Marine Insurance in the United States. Report submitted to the United States Shipping Board. (1920). Report on Legislative Obstructions to the Development of Marine Insurance in the United States (approved by the Committee on the Merchant Marine and Fisheries, December 11, 1920).

HURLEY, E. N. The New Merchant Marine. Chap. XVII (1920). JOHNSON AND HUEBNER. Principles of Ocean Transportation. Chap. XVI. (1919).

KIRKALDY, A. W. British Shipping. Book II. Chap. VI. (1914). OWEN, D. Ocean Trade and Shipping. Chap. III. (1914).

UNITED STATES. Hearings on Marine Insurance before the Subcommittee on the Merchant Marine and Fisheries. House of Representatives. July, 1919.

CHAPTER XX

ELEMENTS OF MARINE INSURANCE PRACTICE

Insurable interests and some important risks.—The two most important branches of marine insurance are hull insurance and cargo insurance. Besides these, however, freight charges may be insured, also profits from the transportation of the goods as well as any other interest connected with the successful termination of an ocean voyage, as long as this interest can be measured by a monetary standard.

These various interests may be insured against a considerable number of risks and perils, particularly those losses occasioned by the so-called "perils of the sea." This term refers only to fortuitous casualties of the sea and covers only such losses as are caused by storms, fog, lightning, icebergs, derelicts, or other marine obstruction, stranding, foundering, collision with another vessel or with marine. structures, or any other unavoidable damage to property resulting from the elements. In case of collision, two kinds of risks must be distinguished, namely, those to which the property of the insured is exposed and those which arise out of the liability for damage sustained by other vessels, if the shipowner or his agent is at fault in causing this damage. It should be understood that chafing or ordinary wear and tear of cargo practically certain on a sea-voyage-are not included in "perils of the sea"; only an unusual occurrence is provided against, such as shifting of cargo, caused by stress of weather, damage by sea-water, and such other casualties as may be covered by agreement in each individual

case. Nor is the property insured against risks arising from its own inherent defects.

Special risks. Special insurance must be provided for fire risk, jettison, i. e., the throwing overboard of part of the cargo, or casting away the masts, spars, rigging or fittings of vessels for the purpose of lightening or relieving the ship in case of storm or accident for the common good; barratry, which includes all forms of fraud and knavery on the part of the master of the vessel or the crew, such as wilful scuttling or abandonment of the vessel. Also the loss from theft or pilferage must be arranged for especially.

All risks of war are excluded from the ordinary marine policy. They are covered by a separate contract or by endorsement on the policy. The term "war risk" covers losses of ship or cargo caused by an enemy, pirate or man-of-war. A sample copy of a certificate of insurance against war risk is found on page 391.

Meaning of "all other perils."-The term "all other perils," as legally interpreted, includes only risks or perils similar to those distinctly stated in the policy contract. By arrangement, all kinds of clauses may be written into a marine insurance policy, covering such risks as are attached to mule-back transportation in the Andes, leakage of liquids, breakage of machinery, etc. Indeed, we might say that the marine insurance policy may be made to cover practically every conceivable transportation risk to which any oversea shipment is subjected from the time that it leaves the manufacturer's plant-possibly far inland-until it reaches the consignee, who may also be located hundreds of miles from the port of debarkation.1

The term marine insurance is applied to many inland shipments which do not touch a boat at all; cf. cotton transportation within the United States.

(PLACE AND DATE New York, April 7, 1917.

This is to Certify, That on the 7th day of April.

this Company, in consideration of the premium agreed to be paid insured,.

-19-17

for

Dollars

valued at sum hereby insured, per

S/S_Verdi

Warranted sailing on or before... April 15, 1917.

from. New York

to

Montevideo

This insurance covers only the risk of capture, seizure or destruction or damage by men-of-war, by letters of mart, by takings at sea, arrests, restraints, detainments and acts of kings, princes and people authorized by and in prosecution of hostilities between belligerent nations; but excluding claims for delay, deterioration and/or loss of market and warranted not to abandon in case of capture, seisure or detention, until after condemnation of the property insured, nor until sixty day after notice of and condemnation is given to this Company. Also warranted not to abandon in case of blockade, and free from any claim for loss or expense in consequence of blockade, or of any attempt to evade blockade, but, in event of blockade to be at liberty to prooted to be apen hort and there and the voyage. Warranted covering while waterborne only and excluding any risks on land. Warranted no German Austrian or Turkish ownership pres, consignee or destination; and warranted free of condemnation on the ground ch ownership, interest, consignee, or it is warranted that the bills of lading shall show

destination.

On shipments to neutral countries fo the name and address of the consignee.

In case of any loss or misfortune, it shall be lawful and necessary to and for the assured, his or their factors, servants and assigns, to sue, labor and travel for, in and about the defence, safeguard and recovery of the said goods and merchandises, or any part thereof, without prejudice to this insurance; nor shall the acts of the assured or insurers, in recovering, saving and preserving the property insured, in case of disaster, be considered a waiver or an acceptance of abandonment; to the charges whereof, the said Insurance Company will contribute according to the rate and quantity of the sum herein insured.

In case of loss, such loss to be paid in thirty days after full proofs of loss, proofs of interest, and adjustment exhibited to the insurers.
It is hereby understood and agreed that, in case of loss, such loss is payable to the order of... Federico Gomez & Cia
Montevideo
on surrender of this policy, which conveys all rights

of the original assured as herein provided (for the purpose of collecting any loss) and (as respects third parties) is free from any liability for unpaid premiums.

In case of claim under this policy immediate notice is to be sent to this Company at Philadelphia or to Messrs. W. K. Webster & Co. at London, England.

Under certificates issued in Dollars and payable abroad, claims to be settled at the current rate of Exchange.

Not valid unless Countersigned

by Platt & Farnum

Countersigned,

Claims are to be adjusted according to the usage at Lloyds, but subject to the conditions of the policy.

SAMPLE

President

Messrs. W. K. WEBSTER & CO., 2 Lime Street Square, London, England, are the Attorneys of the Company, on whom service of process can be made. Notice. To conform with the Revenue Laws of Great Britain, in order to collect a clasm under this Certificate, it must be stamped within Ten days after de receipt in the United Kingdom.

Payment of Internal Revenue Stamp Tax guaranteed by the Insurance Company of North America under Treasury Decision No. 2100.

"ALSO WARRANTED FREE OF CLAIM FOR LOSS, DAMAGE OR EXPENSE

IN CONSEQUENCE OF ANY PROHIBITION, RESTRICTION OR EMBARGO. OF
OR BY THE GOVERNMENT OF THE UNITED STATES OF AMERICA OR OF
ANY VIOLATION OR ATTEMPTED VIOLATION THEREOF."

WARRANTED FREE FROM ANY EXPENSE, LOSS
AND/OR DAMAGE ARISING FROM CAPTURE, SEIZURE,
ARREST, RESTRAINT, PREEMPTION OR DETAINMENTS
BY THE UNITED STATES GOVERNMENT OR THE
GOVERNMENT OF ANY STATE THEREOF.

Courtesy National Association of Manufacturers.

B/L No. 4182

Different losses.-Marine insurance may offer protection against various kinds of losses. In the first place, a policy may be taken out to cover the "total loss" of the vessel, its freight, cargo, profits or other insurable interests. A distinction is made between "actual total loss" and "constructive total loss." The first covers a total destruction, or damage to such an extent that the property is absolutely no longer of practical value to the insurer. Constructive total loss, on the other hand, is sustained in cases where property, although but slightly damaged, is, nevertheless, owing to surrounding circumstances, placed in such a way that it is of no further value to the insurer. The usual example cited for this case is that of a vessel which, although but slightly damaged, must be abandoned. In this case, the insured gives notice of abandonment and obtains the full amount of the insurance on a "constructive total loss."

"Partial loss" is a loss of a portion of the thing insured. "Partial loss" may be settled in accordance with either "particular average" or "general average" rules. A "general average" loss is one "arising out of sacrifices made or extraordinary expenses incurred for the preservation of the ship, cargo and freight money, for the benefit of all interests. This is assessed ratably against all property involved. It is a voluntary and intentional extraordinary sacrifice to protect all the common good. A sacrifice to protect the ship alone, or the cargo alone, is not covered by general average. It is the opposite of an accidental loss caused by a maritime peril. A loss caused by water to extinguish a fire is general average, but not to the packages which themselves were on fire." 1

Average adjustment.-"Subsequent to the establishment of the act of voluntary sacrifice it is the duty of the