ABSTRACT
The premium payment obligation is subject to different rules in marine and non-marine insurance. In the former context, the MIA 1906, s. 53 codified the fiction applicable prior to the Act that the assured had paid the premium to the insurer who lent it back to the assured’s broker, so that it is the broker’s responsibility to pay the premium to the insurer. This fiction has a number of consequences including that the assured, in principle, may not be in breach of the premium payment obligation. This then causes controversies when a policy, for instance, includes an express premium payment obligation on the assured: does this clause override the fiction, can it be read together with the fiction, should it be assumed that this clause has no application given the fiction? Key words: custom, fiction, s. 53 of the MIA 1906, insurance broker, premium payment warranty, divisibility of the premium, instalments, consequences of non-payment of premium, time is of the essence, innominate term, broker’s lien, broker’s cancellation clause, return of the premium, total failure of consideration.
