ABSTRACT
An insurer is liable for the loss which is caused by an insured peril. In marine insurance policies the proximate, not the remote, causes are to be regarded. Thus, whether or not a loss is covered by a marine policy depends on ascertaining its proximate cause. The distinction between perils of and on the sea was made in Thames and Mersey Marine Insurance Co Ltd v Hamilton Fraser and Co, in which a pump on board the Inchmaree was insured by a policy of marine insurance. The inherent vice exception was argued but rejected by the Privy Council in Canada Rice Mills Ltd v Union Marine and General Insurance Co Ltd. Similar to inherent vice, in the case of ordinary wear and tear the loss occurs without any fortuitous external accident or casualty. It is inevitable for a ship which is used for carriage by sea to experience a certain degree of decay and diminution in value.
