The Marine Insurance Act 1906 is a UK Act of Parliament regulating marine insurance

Marine insurance

Marine insurance covers the loss or damage of ships, cargo, terminals, and any transport or cargo by which property is transferred, acquired, or held between the points of origin and final destination....

. The Act was drafted by Sir Mackenzie Dalzell Chalmers

Mackenzie Dalzell Chalmers

Sir Mackenzie Dalzell Chalmers KCB CSI , judge and civil servant, was Parliamentary Counsel to the Treasury, a Judge of the County Courts and a Law Member of the Viceroy's Council in India. He was also Permanent Under Secretary of State of the Home Office from 1903 to 1908.His mother was Matilda,...

, who had earlier drafted the Sale of Goods Act 1893

Sale of Goods Act 1893

The Sale of Goods Act 1893 was an Act of the Parliament of the United Kingdom of Great Britain and Ireland which regulated contracts in which goods are sold and bought...

. The Marine Insurance Act 1906 is of huge significance, as it does not merely govern English Law, but dominates marine insurance worldwide. The Act applies not only to "commercial" marine insurance, but also to protection and indemnity insurance  (P&I clubs). This hundred-year-old act is reaching the end of its life and is expected to be repealed and reenacted by about 2012 (see below).

Overview

The most important sections of this Act include:

s.4: a policy without insurable interest

Insurable interest

Insurable interest exists when an insured person derives a financial or other kind of benefit from the continuous existence of the insured object...

 is void.

s.17: imposes a duty on the insured of uberrimae fides

Uberrima fides

Uberrima fides is a Latin phrase meaning "utmost good faith" . It is the name of a legal doctrine which governs insurance contracts. This means that all parties to an insurance contract must deal in good faith, making a full declaration of all material facts in the insurance proposal...

(as opposed to caveat emptor

Caveat emptor

Caveat emptor is Latin for "Let the buyer beware". Generally, caveat emptor is the property law doctrine that controls the sale of real property after the date of closing.- Explanation :...

); ie. that questions must be answered honestly and the risk not misrepresented.

s.18: the proposer of the insurer has a duty to disclose all material facts relevant to the acceptance and rating of the risk. Failure to do so is known as non-disclosure or concealment (there are minor differences in the two terms) and renders the insurance voidable by the insurer.

s.33(3): If [a warranty] be not [exactly] complied with, then, subject to any express provision in the policy, the insurer is discharged from liability as from the date of the breach of warranty, but without prejudice to any liability incurred by him before that date.

s.34(2): where a warranty has been broken, it is no defence to the insured that the breach has been remedied, and the warranty complied with, prior to the loss.

s.34(3): a breach of warranty may be waived (ie. ignored) by the insurer.

s.50: a policy may be assigned

Assignment (law)

An assignment is a term used with similar meanings in the law of contracts and in the law of real estate. In both instances, it encompasses the transfer of rights held by one party—the assignor—to another party—the assignee...

. Typically, a shipowner might assign the benefit of a policy to the ship-mortgagor.

ss.60-63: deals with the issues of a constructive total loss. The insured can, by notice, claim for a constructive total loss with the insurer becoming entitled to the ship or cargo if it should later turn up. (By contrast an actual total loss describes the physical destruction of a vessel or cargo.)

s.79: deals with subrogation

Subrogation

Subrogation in its most common usage refers to circumstances in which an insurance company tries to recoup expenses for a claim it paid out when another party should have been responsible for paying at least a portion of that claim....

; ie. the rights of the insurer to stand in the shoes of an indemnified

Indemnity

An indemnity is a sum paid by A to B by way of compensation for a particular loss suffered by B. The indemnitor may or may not be responsible for the loss suffered by the indemnitee...

 insured and recover salvage

Marine salvage

Marine salvage is the process of rescuing a ship, its cargo, or other property from peril. Salvage encompasses rescue towing, refloating a sunken or grounded vessel, or patching or repairing a ship...

 for his own benefit.

Schedule 1 of the Act contains a list of definitions; schedule 2 contains the model policy wording.

http://www.airmic.com/research/guides/disclosure-material-facts-and-information-business-insurance

Reform

The Act is up for review due the perception that there is a problem with uberrimae fidei. Insurance involves the transference of risk in return for an insurance premium (or fo a "P&I call"); and it is essential for the assured to make to the insurer a full disclosure of all material risks. However, beyond this disclosure requirement, some people think there is little need for utmost good faith in insurance contracts and argue it is hard to see how insurers should reciprocate good faith to the assured. (A minor issue is that "theft" in the 1906 Act would be more properly termed "burglary" or "robbery", using the definitions of the Theft Act 1968

Theft Act 1968

The Theft Act 1968 is an Act of the Parliament of the United Kingdom. It creates a number of offences against property in England and Wales.On 15 January 2007 the Fraud Act 2006 came into force, redefining most of the offences of deception.-History:...

). It is expected that the proposed new Marine Insurance Act will be very close in form and content to the current 1906 Act. (When Sir Mackenzie Chalmers' Sale of Goods Act 1893 was repealed and reenacted as the Sale of Goods Act 1979, the new statute retained similar wording and section numbering as the original Act, much to everyone's relief).