ABSTRACT

The major difficulty in this area of law lies with the principle against double insurance. Any outlay incurred by a shipowner before the commencement of the risk, whether for repairs of permanent fixtures or fittings, or for the purchase of stores and provisions, or for port charges, is either represented by some part of the value of the ship or is defrayed out of freight. Thus, the same item may be insured twice over, first, in the policy on ship, and then on disbursements or freight and disbursements, as the case may be. This problem of duplicity arose in The Gunford Case64 where the owners, in addition to a policy on ship, effected a valued honour policy on disbursements. The House of Lords held that, as some of the payments consisting of current working expenses were also covered by the insurance on gross freight, and some of the expenses consisting of repair costs, outfit, and insurance premium on hull were also covered by their policy on ship and materials, there was over-insurance by double insurance. In the circumstances, the owners were not allowed recovery for any sum in excess of the indemnity allowed by law.