Marine Insurance Act 1908

The Marine Insurance Act 1908 is the main New Zealand statute setting out the legal rules for contracts of marine insurance. It explains what counts as marine insurance, what kinds of marine adventures can be insured, who has an insurable interest, what must be disclosed before cover is agreed, what a policy must contain, and how losses, warranties, voyage changes and insurer rights are treated.

For a business owner, the key point is that marine insurance is not just about buying a policy and making a claim later. The Act makes the pre-contract stage, the wording of the policy, and the conduct of the voyage central to whether cover responds. If your business ships goods, owns vessels, arranges freight, or places cover through a broker, these rules can affect whether you are insured at all.

The Act applies to contracts where the insurer undertakes to indemnify the assured against marine losses, meaning losses incident to marine adventure. It also says cover may be extended by express terms or trade usage to inland waters or land risks incidental to a sea voyage. That means a business should not assume the Act stops at the ship’s rail if the policy is written more broadly.

Common trigger points include importing stock by sea, exporting goods overseas, insuring a vessel for a voyage, covering freight revenue, insuring advances or disbursements tied to a voyage, and arranging cover where third-party liability may arise from maritime perils. The Act also recognises reinsurance, partial interests, contingent interests and some specialised interests such as wages and advance freight.

The Act requires a real insurable interest. A person has an insurable interest if they are interested in the marine adventure and may benefit from the safe arrival of the property, be prejudiced by its loss or damage, or incur liability in respect of it. This can include legal or equitable interests, partial interests, contingent interests, mortgage interests and reinsurance interests.

The Act also makes clear that marine insurance by way of gaming or wagering is void. A contract is treated as a wagering contract where the assured has no insurable interest and no expectation of acquiring one, or where the policy uses certain forms of wording such as “interest or no interest” or similar terms. For a business, this means the commercial connection to the cargo, ship, freight or liability should be clear and documented.

The assured must be interested in the subject matter at the time of the loss, although not necessarily when the insurance is first effected. There are special rules for “lost or not lost” cover, so timing and knowledge of loss matter.

One of the most important parts of the Act is the duty of disclosure. Before the contract is concluded, the assured must disclose every material circumstance known to it, and is deemed to know every circumstance that ought to be known in the ordinary course of business. If the assured fails to disclose a material circumstance, the insurer may avoid the contract.

A circumstance is material if it would influence the judgment of a prudent insurer in fixing the premium or deciding whether to take the risk. The Act says some matters need not be disclosed without inquiry, including circumstances that diminish the risk, matters known or presumed known to the insurer, matters waived by the insurer, and matters made superfluous by an express or implied warranty.

The same discipline applies to representations made during negotiations. Every material representation made by the assured or its agent before the contract is concluded must be true. A factual representation must be substantially correct, and a statement of expectation or belief must be made in good faith. A representation can be withdrawn or corrected before the contract is concluded.

The Act says a contract of marine insurance is concluded when the insurer accepts the proposal, whether the policy is then issued or not. But that does not answer every coverage question. The policy wording still matters because the Act contains detailed rules about what the policy must specify and how common marine terms are interpreted.

A marine policy must specify the assured or the person effecting insurance on the assured’s behalf, the subject matter insured and the risk insured against, the voyage or period of time or both, the sums insured, and the insurers’ names. The subject matter must be designated with reasonable certainty. If your business uses broad cargo descriptions, floating arrangements or shipment declarations, accuracy is important.

The Schedule also explains when risk attaches under phrases such as “from”, “at and from”, and “from the loading thereof”. For example, goods insured “from the loading thereof” are not covered until they are actually on board. If your business assumes warehouse-to-warehouse style protection, check whether the marine wording really gives that result.

The Act contains strict rules about the voyage actually undertaken. If the place of departure specified in the policy is changed, or the ship sails for a different destination than the one specified, the risk may not attach at all. After risk has commenced, a voluntary change of destination is a change of voyage, and unless the policy says otherwise the insurer is discharged from liability from the time the decision to change is manifested.

Deviation is also important. If a ship departs from the course designated by the policy, or from the usual and customary course where no specific course is designated, the insurer is discharged from liability from the time of deviation. In a voyage policy, the adventure must also be prosecuted with reasonable despatch. Unreasonable delay without lawful excuse can discharge the insurer from liability from the time the delay became unreasonable.

The Act recognises excuses, including policy authorisation, circumstances beyond control, compliance with warranty, safety needs, saving human life, obtaining medical aid, and some barratrous conduct where that peril is insured. Once the excuse ends, the ship must resume course with reasonable despatch.

Under the Act, a warranty is a promissory warranty. It is a condition that must be exactly complied with, whether material to the risk or not. If it is not complied with, the insurer is discharged from liability from the date of breach, subject to any express policy provision and without affecting liability already incurred before that date. This is a strict rule and one of the biggest practical risks in marine insurance.

The Act deals with express and implied warranties, including legality and seaworthiness. In a voyage policy there is an implied warranty that the ship is seaworthy at the commencement of the voyage, and in some cases at the commencement of each stage. In a time policy there is no implied warranty of seaworthiness at every stage, but if the ship is sent to sea in an unseaworthy state with the assured’s privity, the insurer is not liable for loss attributable to unseaworthiness.

The Act also addresses total and partial loss, constructive total loss, notice of abandonment, salvage charges, general average, measure of indemnity, under-insurance, subrogation and contribution. For a business, the practical lesson is to treat policy conditions and claim preparation as operational issues, not just legal fine print.

The Act includes several practical rules that matter for day-to-day administration. Where a policy is effected through a broker, the broker is, unless otherwise agreed, directly responsible to the insurer for the premium, and the insurer is directly responsible to the assured for losses or returnable premium. The broker also has lien rights in some circumstances. Businesses should understand who is paying, who is collecting, and who holds the policy documents.

The Act also deals with double insurance. If two or more policies cover the same adventure and interest and the sums insured exceed the indemnity allowed, the assured is overinsured by double insurance. The assured may claim in the order it chooses, subject to not recovering more than the indemnity allowed. Any excess received is held in trust for insurers according to contribution rights.

Marine policies are generally assignable unless assignment is expressly prohibited, and they may be assigned before or after loss. But assigning the commercial interest does not automatically transfer rights under the insurance contract unless there is an express or implied agreement to that effect. Good records are essential.