CHAPTER XXIV. THE MEASURE OF DAMAGES ON CONTRACTS OF INSURANCE. 1.-MARINE INSURANCE. § 709. Marine insurance a contract of | § 715. One-third new for old, indemnity. 710. Total loss. 711. Constructive total loss. 712. Measure of loss on open policy. 713. Valued policy. 714. Partial loss. 716. Exceptions to rule of indemnity. 717. General average. 718. Proximate cause and consequential loss. 719. Reduction of damage. II.-FIRE INSURANCE. § 720. Fire insurance a contract of § 724. Consequential loss. indemnity. 721. Measure of loss. 722. Actual value of the property lost. 723. Election of insurer to rebuildAlternative contract. 725. Damages affected by the title. 727. Loss of insurance through de- III.-LIFE INSURANCE. §729. Life insurance not a contract | § 731. Accident insurance. of indemnity. 730. Refusal to issue or continue a policy. 732. Assessment policies. MARINE INSURANCE. 709. Marine insurance a contract of indemnity.-* Marine insurance is defined to be a "contract of indemnity in which the insurer, in consideration of the payment of a certain premium, agrees to make good to the assured all losses, not exceeding a certain amount, that may happen to the subject insured, from the risks enumerated or im plied in the policy, during a certain voyage or period of time."1 In England this contract retains more nearly its original and proper character as a contract of indemnity measured by the actual loss; but in the United States it has been very materially modified by the introduction of various arbitrary rules, among which the most prominent are the deduction of “one-third new for old," the doctrine of abandonment for constructive total loss, and the principles adopted in the settlement of general averages. There is no branch of the law in which the rule of compensation has been made so much to yield to that of arbitrary remuneration, if it may be so called-in other words, the principle analogous to that of the Lex Aquilia of the Roman law, by which, instead of an inquiry into the exact circumstances of the particular case, a fixed rate or proportion is determined by which the recovery in all instances is governed. The losses for which the insurer becomes liable fall under one of these three heads: § 710. Total loss.-* A total loss occurs where the thing insured is physically destroyed or rendered valueless; (*) or where, under the doctrine of constructive losses, the deterioration is so great as to authorize the insured to abandon and demand payment as for an actual physical total loss.** 'Duer on Marine Insurance, vol. i, p. 58; Hamilton v. Mendes, 2 Burr. 1198, 1210. 'This is, however, common to the English system. (*) Insurance Co. v. Fogarty, 19 Wall. 640; Wallerstein v. Columbian Ins. Co., 44 N. Y. 204. $711. CONSTRUCTIVE TOTAL LOSS. 395 In some of the early cases actual destruction was said to be necessary to enable the insured to recover for a total loss;(*) but the rule now is as just stated. So, if goods are by perils of the sea reduced to such a condition that they could not be restored to the assured in their original character, at the original place of their destination, this is a total loss. () Where there is an entire loss of any separate part of the cargo there is a total loss. of that portion of the cargo; so where a number of mules were insured, and some of them were lost, the recovery was for a total loss of that portion of the property insured, and the case being that of a valued policy the recovery was of a proportionate amount of the whole valuation. (°) § 711. Constructive total loss.—* In case of total loss, it has been settled that the assured can abandon to the un derwriters, and claim payment of the sum insured. This doctrine was not introduced into the law of insurance until long after the contract was familiarly known to commerce, and is very differently applied in different commercial countries. In the United States, whenever upon a disaster taking place, the thing insured, after making the deduction of one-third new for old, is found to be damaged more than half its value, the assured can abandon to the underwriters and claim a total loss. In other words, instead of being entitled to a compensation for the actual damages sustained, he may recover the whole value of his interest at risk. This rule, in a modified form, prevails in France, and generally on the con (*) Navone v. Haddon, 9 C. B. 30; Depeyster v. Sun M. I. Co., 17 Barb. 306. () Navone v. Haddon, 9 C. B. 30. (c) Brooke v. Louisiana S. I. Co., 16 Mart. 640, 681; acc. Harris v. Eagle Fire Co., 5 Johns. 368. tinent; but the English law firmly maintains the more salutary doctrine that no abandonment can be sustained unless the thing assured is injured to its full value.** Where goods insured on a valued policy are shipped for sale, and after a constructive total loss they are abandoned to the insurer and sold, the expense of the sale must be borne by the insurer.(") $712. Measure of loss on open policy. The measure of loss on an open marine policy is the actual value of the property lost. Thus where an insured vessel is lost, the value and not the cost of the vessel is recoverable; (b) and where the market value was depressed through temporary causes it was held that the jury was not restricted to such market value, but might find a higher actual value.() In arriving at the value of a cargo, the insurance premium, commissions and charges are to be added to the invoice price at the loading port.(") The recovery upon an open policy is not restricted to the actual value of the property lost; the owner may also recover the necessary expenses of laboring for the safety and recovery of the vessel.() Where a vessel met with a partial loss, was repaired, proceeded on her voyage, and met with a total loss, not only the value of the vessel, but also the expense of the repairs may be recovered. (*) A general custom to pay the gross and not the net amount of freight on an open policy has been held good, though it affords more than complete indemnity.(") (*) Portsmouth Ins. Co. v. Brazee, 16 Oh. 81. () Snell v. Delaware Ins. Co., 4 Dall. 430. () McCuaig v. Quaker City Ins. Co., 18 Up. Can. Q. B. 130. (4) Usher v. Noble, 12 East 639; Louisville M. & F. I. Co. v. Bland, Dana 143, 157; Minturn v. Columbian Ins. Co., 10 Johns. 75. 9 (*) McBride v. Marine Ins. Co., 7 Johns. 431; as, in case of a captured vessel, legal expenses in the prize courts, Lawrence v. Van Horne, 1 Cai. 276. (Le Cheminant v. Pearson, 4 Taunt. 367. (*) Palmer v. Blackburn, 1 Bing. 61. §§ 713, 714. PARTIAL LOSS. 397 § 713. Valued policy. The open marine policy has been almost superseded by the valued policy, in which the amount to be paid upon total loss is liquidated.(*) The agreed valuation is recovered upon a total loss, notwithstanding the market value has risen or fallen between the valuation and the loss. (b) In case of a valued policy upon cargo or freight, there is sometimes a total loss before the cargo has been entirely loaded, or after part has been discharged. Where a valued policy is issued on cargo it has finally been decided to mean that cargo which the vessel is intended to carry, not such goods as may form the whole load at a particular moment; consequently when a total loss happens after part of the cargo has been taken on or discharged the valuation is opened and the actual loss recovered.(") So where there is a valued insurance on freight, and only part of the cargo has been taken on at the time of loss, the valuation will be opened, though it is proved that a full return cargo would have been secured.(") § 714. Partial loss.-Partial loss is, as its name implies, a partial destruction of the thing insured. In adjusting. a partial loss, it is estimated by the relative value of sound and damaged goods at the port of delivery, taking the value in the policy or the invoice price as the basis, without reference to the rise and fall in the market. () Re (*) "A valued policy' is not understood to be one which estimates the value of the property insured merely, but which values the loss, and is equivalent to an assessment of damages in the event of a loss." Agnew, J., in Lycoming Ins. Co. v. Mitchell, 48 Pa. 367, 372. () Portsmouth Ins. Co. v. Brazee, 16 Oh. 81. () Tobin v. Harford, 13 C. B. N. S. 791; 17 C. B. N. S. 528; overruling Shawe v. Felton, 2 East 109. () Forbes v. Aspinall, 13 East 323. But the court added that the valuation could have been recovered if the whole cargo had been shipped, though the voyage had not yet begun. () Lewis v. Rucker, 2 Burr. 1167; Usher v. Noble, 12 East 639. |