55. Included and excluded losses.—(1) Subject to the provisions of this Act, and unless the policy
otherwise provides, the insurer is liable for any loss proximately caused by a peril insured against, but,
subject as aforesaid, he is not liable for any loss which is not proximately caused by a peril insured
against.
(2) In particular—
(a) the insurer is not liable for any loss attributable to the wilful misconduct of the assured, but,
unless the policy otherwise provides, he is liable for any loss proximately caused by a peril insured
against, even though the loss would not have happened but for the misconduct or negligence of the
master or crew;
(b) unless the policy otherwise provides, the insurer on ship or goods is not liable for any loss
proximately caused by delay, although the delay be caused by a peril insured against;
(c) unless the policy otherwise provides, the insurer is not liable for ordinary wear and tear,
ordinary leakage and breakage, inherent vice or nature of the subject-matter insured, or for any loss
proximately caused by rats or vermin, or for any injury to machinery not proximately caused by
maritime perils.
56. Partial and total loss.—(1) A loss may be either total or partial. Any loss other than a total loss,
as hereinafter defined, is a partial loss.
(2) A total loss may be either an actual total loss, or a constructive total loss.
(3) Unless a different intention appears from the terms of the policy, an insurance against total loss
includes a constructive, as well as an actual, total loss.
(4) Where the assured brings a suit for a total loss and the evidence proves only a partial loss, he may,
unless the policy otherwise provides, recover for a partial loss.
(5) Where goods reach their destination in specie, but by reason of obliteration of marks, or
otherwise, they are incapable of identification, the loss, if any, is partial and not total.
57. Actual total loss.—(1) Where the subject-matter insured is destroyed, or so damaged as to cease
to be a thing of the kind insured, or where the assured is irretrievably deprived thereof, there is an actual
total loss.
(2) In the case of an actual total loss no notice of abandonment need be given.
58. Missing ship.—Where the ship concerned in the adventure is missing, and after the lapse of a
reasonable time no news of her has been received, an actual total loss may be presumed.
59. Effect of transhipment, etc.—Where, by a peril insured against, the voyage is interrupted at
intermediate port or place, under such circumstances as, a part from any special stipulation in the contract
of a freightment, to justify the master in landing and reshipping the goods or other movables, or in
transhipping them, and sending them on to their destination, the liability of the insurer continues,
notwithstanding the landing or transhipment.
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60. Constructive total loss defined.—(1) Subject to any express provision in the policy, there is a
constructive total loss where the subject-matter insured is reasonably abandoned on account of its actual
total loss appearing to be unavoidable, or because it could not be preserved from actual total loss without
an expenditure which would exceed its value when the expenditure had been incurred.
(2) In particular, there is a constructive total loss—
(i) where the assured is deprived of the possession of his ship or goods by a peril insured
against, and
(a) it is unlikely that he can recover the ship or goods, as the case may be, or
(b) the cost of recovering the ship or goods, as the case may be,
would exceed their value when recovered; or
(ii) in the case of damage to a ship, where she is so damaged by a peril insured against that the
cost of repairing the damage would exceed the value of the ship when repaired.
In estimating the cost of repairs, no deduction is to be made in respect of general average
contributions to those repairs payable by other interests, but account is to be taken of the expense of
future salvage operations and of any future general average contributions to which the ship would be
liable if required; or
(iii) In the case of damage to goods, where the cost of repairing the damage and forwarding the
goods to their destination would exceed their value on arrival.
61. Effect of constructive total loss.—Where there is a constructive total loss the assured may either
treat the loss as a partial loss, or abandon the subject-matter insured to the insurer and treat the loss as if it
were an actual total loss.
62. Notice of abandonment.—(1) Subject to the provisions of this section, where the assured elects
to abandon the subject-matter insured to the insurer, he must give notice of abandonment. If he fails to do
so the loss can only be treated as a partial loss.
(2) Notice of abandonment may be given in writing, or by word of mouth, or partly in writing and
partly by word of mouth, and may be given in any terms which indicate the intention of the assured to
abandon his insured interest in the subject-matter insured unconditionally to the insurer.
(3) Notice of abandonment must be given with reasonable diligence after the receipt of reliable
information of the loss, but where the information is of a doubtful character the assured is entitled to a
reasonable time to make enquiry.
(4) Where notice of abandonment is properly given, the rights of the assured are not prejudiced by the
fact that the insurer refuses to accept the abandonment.
(5) The acceptance of an abandonment may be either express or implied from the conduct of the
insurer. The mere silence of the insurer after notice is not an acceptance.
(6) Where notice of abandonment is accepted the abandonment is irrevocable. The acceptance of the
notice conclusively admits liability for the loss and the sufficiency of the notice.
(7) Notice of abandonment is unnecessary where at the time when the assured receives information of
the loss, there would be no possibility of benefit to the insurer if notice were given to him.
(8) Notice of abandonment may be waived by the insurer.
(9) When an insurer has reinsured his risk, no notice of abandonment need be given by him.
63. Effect of abandonment.—(1) Where there is a valid abandonment the insurer is entitled to take
over the interest of the assured in whatever may remain of the subject-matter insured, and all proprietary
rights incidental thereto.
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(2) Upon the abandonment of a ship, the insurer thereof is entitled to any freight in course of being
earned, and which is earned by her subsequent to the casualty causing the loss, less the expenses of
earning it incurred after the casualty; and, where the ship is carrying the owner’s goods, the insurer is
entitled to a reasonable remuneration for the carriage of them subsequent to the casualty causing the loss.
PARTIAL LOSSES (INCLUDING SALVAGE AND GENERAL AVERAGE AND PARTICULAR CHARGES)
64. Particular average loss.—(1) A particular average loss is a partial loss of the subject-matter
insured, caused by a peril insured against, and which is not a general average loss.
(2) Expenses incurred by or on behalf of the assured for the safety or preservation of the
subject-matter insured, other than general average and salvage charges, are called particular charges.
Particularly charges are not included in particular average.
65. Salvage charges.—(1) Subject to any express provision in the policy, salvage charges incurred in
preventing a loss by perils insured against may be recovered as a loss by those perils.
(2) “Salvage charges” means the charges recoverable under maritime law by a salvor independently
of contract. They do not include the expenses of services in the nature of salvage rendered by the assured
or his agents, or any person employed for hire by them, for the purpose of averting a peril insured against.
Such expenses, where properly incurred, may be recovered as particular charges or as a general average
loss, according to the circumstances under which they were incurred.
66. General average loss.—(1) A general average loss is a loss caused by or directly consequential
on a general average act. It includes a general average expenditure as well as a general average sacrifice.
(2) There is a general average act where any extraordinary sacrifice or expenditure is voluntarily and
reasonably made or incurred in time of peril for the purpose of preserving the property imperilled in the
common adventure.
(3) Where there is a general average loss, the party on whom it falls is entitled, subject to the
conditions imposed by maritime law, to a rateable contribution from the other parties interested, and such
contribution is called a general average contribution.
(4) Subject to any express provision in the policy, where the assured has incurred a general average or
expenditure, he may recover from the insurer in respect of the proportion of the loss which falls upon
him; and in the case of a general average sacrifice, he may recover from the insurer in respect of the
whole loss without having enforced his right of contribution from the other parties liable to contribute.
(5) Subject to any express provision in the policy, where the assured has paid, or is liable to pay, a
general average contribution in respect of the interest insured, he may recover therefor from the insurer.
(6) In the absence of express stipulation, the insurer is not liable for any general average loss or
contribution where the loss was not incurred for the purpose of avoiding, or in connection with the
avoidance of a peril insured against.
(7) Where ship, freight, and cargo, or any two of those interests, are owned by the same assured, the
liability of the insurer in respect of general average losses or contributions is to be determined as if those
interests were owned by different persons.