Marine Insurance Act (S.C. 1993, c. 22)

Marginal note:Total and partial losses

54 A loss may be a total loss or a partial loss.

Marginal note:Types of total loss

• 55 (1) A total loss may be an actual total loss or a constructive total loss.

• Marginal note:Losses covered

  (2) Unless a marine policy otherwise provides, insurance against total loss includes both actual total loss and constructive total loss.

Marginal note:Actual total loss

• 56 (1) A loss is an actual total loss if the subject-matter insured is destroyed or is so damaged as to cease to be a thing of the kind insured or if the insured is irretrievably deprived of the subject-matter.

• Marginal note:Idem

  (2) Where a ship engaged in a marine adventure is missing and no news of the ship is received within a reasonable period, an actual total loss may be presumed.

Marginal note:Constructive total loss

• 57 (1) Unless a marine policy otherwise provides, a loss is a constructive total loss if the subject-matter insured is reasonably abandoned because the actual total loss of the subject-matter appears unavoidable or the preservation of the subject-matter from actual total loss would entail costs exceeding its value when the costs are incurred.

• Marginal note:Idem

  (2) Without limiting the generality of subsection (1), a loss is a constructive total loss if

  • (a) in the case of a ship or goods, the insured is deprived of possession of the ship or goods by reason of a peril insured against and either the insured is unlikely to recover the ship or goods or the cost of recovery would exceed the value of the ship or goods when recovered;

  • (b) in the case of a ship, the ship is so damaged by a peril insured against that the cost of repairing it would exceed the value of the ship when repaired; or

  • (c) in the case of goods, the goods are so damaged that the cost of repairing and forwarding them to their destination would exceed the value of the goods on arrival.

• Marginal note:Cost of repair of ship

  (3) For the purposes of paragraph (2)(b), in estimating the cost of repairing a ship, no deduction may be made in respect of general average contributions to the repairs payable by other interested persons, but account is to be taken of the cost of future salvage operations and of any future general average contributions to which the ship would be liable if repaired.

Marginal note:Treatment

• 58 (1) An insured may treat a constructive total loss as a partial loss or may abandon the subject-matter insured to the insurer and treat the constructive total loss as an actual total loss.

• Marginal note:Notice of abandonment

  (2) Subject to this section and section 59, an insured who elects to abandon the subject-matter insured to the insurer must give a notice of abandonment to the insurer with reasonable diligence after the insured receives reliable information of the loss.

• Marginal note:Time for inquiry

  (3) An insured who receives doubtful information of a loss is entitled to a reasonable time to make inquiries before giving a notice of abandonment.

• Marginal note:Manner of giving notice

  (4) An insured may give a notice of abandonment orally or in writing, or partly orally and partly in writing, and in any terms that indicate the insured’s intention to abandon unconditionally the insured interest in the subject-matter to the insurer.

• Marginal note:Failure to give notice

  (5) If an insured fails to give a notice of abandonment as required by this section, the constructive total loss may be treated only as a partial loss.

Marginal note:Notice not required

• 59 (1) An insured is not required to give a notice of abandonment to the insurer if

  • (a) the loss is an actual total loss;

  • (b) notice is waived by the insurer; or

  • (c) at the time the insured receives information of the loss, there is no possibility of benefit to the insurer if notice were given to the insurer.

• Marginal note:Idem

  (2) An insurer who has reinsured a risk is not required to give a notice of abandonment to the reinsurer.

Marginal note:Refusal of abandonment

• 60 (1) If an insured gives a notice of abandonment as required by section 58, the rights of the insured are not prejudiced by a refusal of the insurer to accept the abandonment.

• Marginal note:Acceptance of abandonment

  (2) An acceptance of an abandonment may be either express or implied from the conduct of the insurer, but the mere silence of an insurer after a notice of abandonment is given does not constitute an acceptance.

• Marginal note:Effect of acceptance on insured

  (3) On acceptance of an abandonment, the abandonment is irrevocable.

• Marginal note:Effect of acceptance on insurer

  (4) On acceptance of an abandonment, the insurer

  • (a) conclusively admits liability for the loss and the sufficiency of the notice of abandonment; and

  • (b) is entitled to acquire the interest of the insured in whatever remains of the subject-matter insured, including all proprietary rights incidental thereto.

• Marginal note:Abandonment of ship

  (5) On acceptance of the abandonment of a ship, the insurer is entitled to

  • (a) any freight being earned at the time of, or earned subsequent to, the casualty causing the loss, less the costs incurred in earning it after the casualty; and

  • (b) if the ship is carrying the shipowner’s goods, reasonable remuneration for the carriage of the goods subsequent to the casualty.

Marginal note:Partial loss

• 61 (1) A partial loss is any loss that is not a total loss.

• Marginal note:Idem

  (2) Where insured goods reach their destination in specie but cannot be identified by reason of obliteration of marks or otherwise, the loss, if any, is a partial loss.

• Marginal note:Recovery for partial loss

  (3) Unless a marine policy otherwise provides, an insured who brings an action for a total loss but establishes only a partial loss may recover for a partial loss.

Marginal note:Types of partial losses

62 A partial loss may be a particular average loss, a general average loss, salvage charges or particular charges.

Marginal note:Particular average loss

• 63 (1) A particular average loss is a loss of the subject-matter insured that is caused by a peril insured against and is not a general average loss, but does not include particular charges.

• Marginal note:Particular charges

  (2) Particular charges are expenses incurred by or on behalf of an insured for the purpose of preserving the subject-matter insured from a peril insured against, but do not include a general average loss or salvage charges.

Marginal note:Salvage charges

• 64 (1) Salvage charges are charges recoverable under maritime law by a salvor independently of any contract, but do not include expenses incurred for services in the nature of salvage rendered by the insured or the insured’s agent, or any person hired by the insured or the insured’s agent, for the purpose of averting a loss by a peril insured against.

• Marginal note:Recovery of salvage charges

  (2) Subject to any express provision in the marine policy, salvage charges incurred for the purpose of averting a loss by a peril insured against may be recovered from the insurer as a loss by such a peril.

• Marginal note:Recovery of other expenses

  (3) The expenses referred to in subsection (1) that are not salvage charges may, when properly incurred, be recovered from the insurer as particular charges or as a general average loss, according to the circumstances under which they were incurred.

Marginal note:General average loss

• 65 (1) A general average loss is a loss caused by or directly consequential on a general average act, and includes a general average sacrifice and a general average expenditure.

• Marginal note:General average act, sacrifice and expenditure

  (2) A general average act is any extraordinary sacrifice or expenditure, known as a general average sacrifice and a general average expenditure, respectively, that is voluntarily and reasonably incurred in time of peril for the purpose of preserving the property from peril in a common adventure.

• Marginal note:General average contribution

  (3) Subject to the conditions imposed by maritime law, a person who incurs a general average loss is entitled to receive from the other interested persons a rateable contribution, known as a general average contribution, in respect of the loss.

• Marginal note:Recovery of general average expenditure and general average sacrifice

  (4) Subject to any express provision in the marine policy,

  • (a) an insured who incurs a general average expenditure may recover from the insurer in respect of the proportion of the loss falling on the insured; and

  • (b) an insured who incurs a general average sacrifice may recover from the insurer in respect of the whole loss, without having enforced the insured’s right to contribution from other persons.

• Marginal note:Recovery of general average contribution

  (5) Subject to any express provision in the marine policy, an insured who has paid, or is liable to pay, a general average contribution in respect of the subject-matter insured may recover the contribution from the insurer.

• Marginal note:Condition

  (6) Subject to any express provision in the marine policy, an insurer is not liable for a general average loss or a general average contribution, unless the loss was incurred for the purpose of averting, or in connection with the avoidance of, a peril insured against.

• Marginal note:Where single ownership

  (7) Where any ship, freight and goods, or any two of them, are owned by the same insured, the liability of the insurer for a general average loss or a general average contribution shall be determined as if they were owned by different persons.

Measure of Indemnity

Marginal note:Measure of indemnity

66 The measure of indemnity in respect of a loss under a marine policy is the amount that the insured can recover in respect of the loss under the policy, such amount not exceeding

• (a) in the case of an unvalued policy, the insurable value of the subject-matter insured; or

• (b) in the case of a valued policy, the value of the subject-matter insured specified by the policy.

Marginal note:Total loss

67 Subject to this Act and any express provision in the policy, the measure of indemnity in respect of a total loss of the subject-matter insured is

• (a) in the case of an unvalued policy, the insurable value of the subject-matter; and

• (b) in the case of a valued policy, the value of the subject-matter specified by the policy.

Marginal note:Partial loss of ship

68 Subject to any express provision in the marine policy, the measure of indemnity in respect of a partial loss of a ship is

• (a) where the ship is repaired, the reasonable cost of the repairs less the customary deductions, but not exceeding the sum insured in respect of any one casualty;

• (b) where the ship is partially repaired, the aggregate of the reasonable cost of the repairs, as determined under paragraph (a), and the reasonable depreciation, if any, arising from the unrepaired damage, the aggregate not exceeding the cost, as determined under paragraph (a), of repairing the whole damage; and

• (c) where the ship is not repaired and is not sold in a damaged state during the risk, the reasonable depreciation arising from the unrepaired damage, but not exceeding the cost, as determined under paragraph (a), of repairing the damage.

Marginal note:Partial loss of freight

69 Subject to any express provision in the policy, the measure of indemnity in respect of a partial loss of freight is that proportion of the insurable value of the freight, in the case of an unvalued policy, or the value of the freight specified by the policy, in the case of a valued policy, that the part of the freight lost by the insured bears to the whole freight at the risk of the insured under the policy.