Marine Insurance Act, R.S.O. 1990, c. M.2

• Jurisdiction: Ontario

Marine Insurance Act

R.S.O. 1990, CHAPTER M.2

Historical version for the period December 2, 1993 to June 3, 2015.

Last amendment: 1993, c. 27, Sched.

Interpretation

Definitions

1. In this Act, unless the context otherwise requires,

“freight” includes the profit derivable by a ship-owner from the employment of the owner’s ship to carry the owner’s goods or movables, as well as freight payable by a third party, but does not include passage-money; (“fret”)

“movables” means any movable tangible property, other than the ship, and includes money, valuable securities and other documents; (“meubles”)

“policy” means a marine policy. (“police”) R.S.O. 1990, c. M.2, s. 1.

Marine insurance defined

2. A contract of marine insurance is a contract whereby the insurer undertakes to indemnify the assured, in manner and to the extent thereby agreed, against marine losses, that is to say, the losses incident to marine adventure. R.S.O. 1990, c. M.2, s. 2.

Extended application

Mixed sea, land and air risks

3. (1) A contract of marine insurance may, by its express terms or usage of the trade, be written so as to protect the assured against losses on inland waters, or may be extended so as to protect the assured against losses on any land or air risk that may be incidental to any sea or inland water voyage. R.S.O. 1990, c. M.2, s. 3 (1).

Where Act applies

(2) Where a ship in course of building, or the launch of a ship, or any adventure analogous to a marine adventure, is covered by a policy in the form of a marine policy, this Act, in so far as applicable, applies thereto; but, except as provided by this section, nothing in this Act alters or affects any rule of law applicable to any contract of insurance other than a contract of marine insurance as defined by this Act. R.S.O. 1990, c. M.2, s. 3 (2).

Marine adventure subject of contract

4. (1) Subject to this Act, every lawful marine adventure may be the subject of a contract of marine insurance. R.S.O. 1990, c. M.2, s. 4 (1).

Marine adventures defined

(2) In particular there is a marine adventure where,

(a) any ship, goods, or other movables are exposed to maritime perils and such property is in this Act referred to as “insurable property”;

(b) the earning or acquisition of any freight, passage-money, commission, profit, or other pecuniary benefit, or the security for any advances, loan, or disbursements, is endangered by the exposure of insurable property to maritime perils;

(c) 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. R.S.O. 1990, c. M.2, s. 4 (2).

Maritime perils defined

(3) “Maritime perils” means the perils consequent on or incidental to the navigation of the sea, that is to say, perils of the seas, fire, war perils, pirates, rovers, thieves, captures, seizures, restraints, and detainments of princes and peoples, jettisons, barratry, and any other perils, either of the like kind or which may be designated by the policy. R.S.O. 1990, c. M.2, s. 4 (3).

Insurable Interest

Wagering or gaming contracts void

5. (1) Every contract of marine insurance by way of gaming or wagering is void. R.S.O. 1990, c. M.2, s. 5 (1).

What contracts of marine insurance deemed void

(2) A contract of marine insurance is deemed to be a gaming or wagering contract,

(a) where the assured has not an insurable interest as defined by this Act, and the contract is entered into with no expectation of acquiring such an interest; or

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

provided that where there is no possibility of salvage, a policy may be effected without benefit of salvage to the insurer. R.S.O. 1990, c. M.2, s. 5 (2).

Insurable interest,

6. (1) Subject to this Act, every person has an insurable interest who is interested in a marine adventure. R.S.O. 1990, c. M.2, s. 6 (1).

defined

(2) In particular a person is interested in a marine adventure where the person stands in any legal or equitable relation to the adventure or to any insurable property at risk therein, in consequence of which the person may benefit by the safety or due arrival of insurable property, or may be prejudiced by its loss or by damage thereto or by the detention thereof, or may incur liability in respect thereof. R.S.O. 1990, c. M.2, s. 6 (2).

When interest must attach

7. (1) The assured must be interested in the subject-matter insured at the time of the loss though the assured need not be interested when the insurance is effected; provided that, where the subject-matter is insured “lost or not lost”, the assured may recover although the assured may not have acquired the interest until after the loss, unless at the time of effecting the contract of insurance the assured was aware of the loss and the insurer was not. R.S.O. 1990, c. M.2, s. 7 (1).

Where no interest

(2) An assured who has no interest at the time of the loss cannot acquire interest by any act or election after becoming aware of the loss. R.S.O. 1990, c. M.2, s. 7 (2).

Defeasible or contingent interests

8. (1) A defeasible interest and a contingent interest are insurable. R.S.O. 1990, c. M.2, s. 8 (1).

Buyer of goods

(2) In particular, where the buyer of goods has insured them, the buyer has an insurable interest, although the buyer might have elected to reject the goods, or have treated them as at the seller’s risk, by reason of the latter’s delay in making delivery or otherwise. R.S.O. 1990, c. M.2, s. 8 (2).

Partial interest

9. A partial interest of any nature is insurable. R.S.O. 1990, c. M.2, s. 9.

Reinsurance

10. (1) The insurer under a contract of marine insurance has an insurable interest in the insurer’s risk and may reinsure in respect of it. R.S.O. 1990, c. M.2, s. 10 (1).

Interest of original assured

(2) Unless the policy otherwise provides, the original assured has no right or interest in respect of such reinsurance. R.S.O. 1990, c. M.2, s. 10 (2).

Bottomry

11. The lender of money on bottomry or respondentia has an insurable interest in respect of the loan. R.S.O. 1990, c. M.2, s. 11.

Master’s and seamen’s wages

12. The master or any member of the crew of a ship has an insurable interest in respect of his or her wages. R.S.O. 1990, c. M.2, s. 12.

Advance freight

13. In the case of advance freight, the person advancing the freight has an insurable interest, in so far as such freight is not repayable in case of loss. R.S.O. 1990, c. M.2, s. 13.

Charges of insurance

14. The assured has an insurable interest in the charges of any insurance that the assured may effect. R.S.O. 1990, c. M.2, s. 14.

Interests of mortgagor, mortgagee, owner

Quantum of interest, mortgagor

15. (1) Where the subject-matter insured is mortgaged, the mortgagor has an insurable interest in the full value thereof, and the mortgagee has an insurable interest in respect of any sum due or to become due under the mortgage. R.S.O. 1990, c. M.2, s. 15 (1).

Mortgagee, consignee

(2) A mortgagee, consignee, or other person having an interest in the subject-matter insured may insure on behalf and for the benefit of any interested person. R.S.O. 1990, c. M.2, s. 15 (2).

Owner

(3) The owner of insurable property has an insurable interest in respect of the full value thereof, although some third person may have agreed, or be liable, to indemnify the owner in case of loss. R.S.O. 1990, c. M.2, s. 15 (3).

Assignment of interest

16. An assured who assigns or otherwise parts with an interest in the subject-matter insured does not thereby transfer to the assignee the assured’s rights under the contract of insurance, unless there is an express or implied agreement with the assignee to that effect; but the provisions of this section do not affect a transmission of interest by operation of law. R.S.O. 1990, c. M.2, s. 16.

Insurable Value

Measure of insurable value

17. Subject to any express provision or valuation in the policy, the insurable value of the subject-matter insured must be ascertained as follows:

1. In insurance on ship, the insurable value is the value, at the commencement of the risk, of the ship, including its outfit, provisions and stores for the officers and crew, money advanced for crew’s wages, and other disbursements, if any, incurred to make the ship fit for the voyage or adventure contemplated by the policy, plus the charges of insurance upon the whole, and the insurable value, in the case of a steamship, includes also the machinery, boilers, and coals, oils, and engine stores if owned by the assured, and, in the case of a ship engaged in a special trade, the ordinary fittings requisite for that trade.

2. In insurance on freight, whether paid in advance or otherwise, the insurable value is the gross amount of the freight at the risk of the assured, plus the charges of insurance.

3. In insurance on goods or merchandise, the insurable value is the prime cost of the property insured, plus the expenses of and incidental to shipping and the charges of insurance upon the whole.

4. In insurance on any other subject-matter, the insurable value is the amount at the risk of the assured when the policy attaches plus the charges of insurance. R.S.O. 1990, c. M.2, s. 17.

Disclosure and Representations

Contract based on utmost good faith

18. A contract of marine insurance is a contract based upon 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. R.S.O. 1990, c. M.2, s. 18.

Disclosure by assured

19. (1) Subject to this section, the assured must disclose to the insurer before the contract is concluded every material circumstance that is known to the assured, and the assured is deemed to know every circumstance that in...