The usual procedure in the offer and acceptance of a risk is as follows: The intending insured (principal or broker) offers the risk by showing to the underwriter a brief description of the venture in question, called in Great Britain a slip, in Course of business. America an application. The underwriter signifies his acceptance of the whole or of a part of the value exposed to perils by signing or initialling the slip, putting down the amount for which he accepts liability. Or he may sign and issue to the insured (principal or broker) a similar document made out in his own office, called a covering note or insurance note. These documents are simply first sketches of the contract, mémoires pour servir, so imperfect that they can be explained only in conjunction with the contract in its completed form (the policy). In America it is not at all rare for insurances to be effected through applications alone without any policy existing. In Great Britain the existence of a policy is essential, slips and covering notes being merely provisional agreements, binding in honour only, to issue policies on certain terms and conditions on receipt of the necessary information. One reason for insisting on a policy being issued for every risk is that a means of raising revenue by stamp taxes is thus created. In Great Britain the stamp duties under the Stamp Act 1891 are as follows:—
| Where the premium does not exceed 1⁄8% of the amount insured | 1d. |
| Where the premium exceeds 1⁄8% of amount insured:— | |
| (a) On any voyage, per £100 or per any fractional part of £100 | 1d. |
| (b) For any time not exceeding six months, per £100, &c., as above | 3d. |
| (c) For any time exceeding six months, and not exceeding twelve months, per £100, &c., as above | 6d. |
In consequence of this regulation, no time policy can be issued for a period exceeding twelve months. Policies or certificates of insurance coming from abroad are subject to the same duties, which should be paid within ten days after receipt in the United Kingdom. The shortness of the time allowed for stamping often prevents payment of the tax. These stamp regulations are very troublesome, and produce only a comparatively insignificant revenue. On small premium insurances the tax is so excessive that it drives business out of the country. A uniform tax per policy has been several times suggested, but these proposals have not yet been accepted by the Treasury.
The documents required to establish a claim for total loss are: (1) Protest of master. (2) Set of bills of lading (endorsed if necessary, so as to be available to the underwriter). (3) Policy or certificate of insurance (endorsed if necessary). (4) In the United States: Statement of loss in detail. In the United States certified copies of Nos. (1), (2), and (3) are taken; but as none of these copy-documents can transfer possession to the underwriter, there is necessary for that purpose another document, viz. (5) Bill of sale and abandonment with subrogation to underwriter—that is, an assignment of all interest to the underwriter. In the absence of the full set of bills of lading, a similar document should be taken in Great Britain, especially in all cases in which salvage operations are likely to be undertaken. Such a document handed to a salvage association or a manager of salvage (whether acting for shipowner or for underwriter) settles the ownership of salved goods, and ensures that any claim for salvage expenses will be sent directly to the underwriter. This is from the insured’s point of view desirable, and it greatly simplifies the management of salvage cases. As a claim for total loss cannot extend beyond the full amount insured in the policy, it follows that the documents required to substantiate such a claim must be supplied to the underwriter free of charge.
For the substantiation of a claim for particular average the following documents are required: (1) Protest of master or logbook. (2) Set of bills of lading (cargo claims). (3) Policy or certificate of insurance (endorsed if necessary). (4) Certified statements in detail of actual cash value at destination of goods in damaged state, all charges paid. Certified statements in detail of sound value at destination of goods on same day, all charges paid. Or original vouchers of costs of repair of ship, all discounts, rebates, allowances and returns deducted. (5) In the United States, subrogation to underwriters of damaged goods.
Authorities.—E. K. Allen, Stamp Duties on Sea Insurances (2nd ed., London, 1903); Th. Andresen, Seeversicherung (Hamburg, 1888); Joseph Arnould, Treatise on the Law of Marine Insurance and Average (2 vols., 2nd edition, London, 1857); eighth edition by de Hart and Simey (London, 1909); Laurence R. Baily, Perils of the Seas (London, 1860); William Barber, Principles of the Law of Insurance (San Francisco, 1887); W. G. Black, Digest of Decisions in Scottish Shipping Cases, 1865-1890 (Edinburgh, 1891); Sir M. D. Chalmers and Douglas Owen, Marine Insurance Act 1906 (London, 1906); Alfred de Courcy, Commentaire des polices françaises d’assurances maritimes (2nd edition, Paris, 1888); E. L. de Hart and R. I. Simey, The Marine Insurance Act 1906 (London, 1907); R. R. Douglas, Index to Maritime Law Decisions (London, 1888); John Duer, Law and Practice of Marine Insurance (2 vols., New York, 1845, 1846); William Gow, Marine Insurance (3rd corrected edition, London, 1909); Victor Jacobs, Étude sur les assurances maritimes et les avaries (Brussels, 1885); Richard Lowndes, Practical Treatise on the Law of Marine Insurance (2nd edition, London, 1885); Law of General Average, English and Foreign (4th edition, London, 1888); Charles M’Arthur, Contract of Marine Insurance (2nd edition, London, 1890); D. Maclachlan, Arnould on the Law of Marine Insurance (2 vols., 6th edition, London, 1887); Reginald G. Marsden, Admiralty Cases, 1648 to 1860 (London, 1885); Law of Collisions at Sea (5th edition, London, 1904), Douglas Owen, Marine Insurance Notes and Clauses (3rd edition, 1890); Theophilus Parsons, Law of Marine Insurance and General Average (2 vols., Boston, 1868); G. G. Phillimore, “Marine Insurance” in Encyclopaedia of the Laws of England, vol. viii. (London, 1907); Willard Phillips, Treatise on the Law of Insurance (2 vols., 5th edition, New York, 1867); C. R. Tyser, Law relating to Losses under a Policy of Marine Insurance (London, 1894); Rudolph Ulrich, Grosse Haverei (2nd ed., 3 vols., Berlin, 1903, 1905, 1906); G. Denis Weil, Des assurances maritimes et des avaries (Paris, 1879).
(W. Go.)
[1] On the Effects of Selection, by Emory McClintock (New York, 1892), p. 94.
[2] As a result of investigation into the affairs of various American insurance companies in 1905 by a committee appointed by the state legislature of New York, a new law regulating life insurance down to the minutest details was passed in 1906 (ch. 326). The surrender value of a policy is to be the amount of insurance which the reserve, computed on the 4½% mortality table, standing to its credit, will purchase as a single premium. Other important features of the legislation are that no New York company may hold a contingency reserve beyond a fixed proportion of the net value of its policies; the limiting of types of policies permitted, the defining of the nature of investments permitted, and provisions for state supervision, valuation, and annual division of profits.