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insurance: valued policy and unvalued policy. Unvalued policy recovered by reason of the high valuation of hull. It was
(section 30 of MIA 1963) does not specify the value of the admitted that it would be a great deal better for the
subject matter insured but sets a limit of the sum insured. shareholders if the ship were lost.
This policy is similar to other kinds of insurance policies like
fire, medical, etc. However, in actuality, choosing the valued If she completed the voyage she would earn £2400 freight,
insurance policy is the modern trend. Valued policy insurance and be worth herself some £9000, in all £11,400. If she were
is an insurance policy where the value of the subject-matter lost her owners and agents stood to receive £35,600, less a
insured is specified or mutually agreed upon by both parties sum of £2400 freight already paid. Their theory of insurance
while making the contract. This effectively allows the insurer was to insure the original capital of the company which
and insured to negotiate the insurable value of the subject owned her and add to that the debts of the company.
matter between themselves, however, it may be very
difficult for them to ascertain the value accurately. The master of the ship had not been to the sea for twenty-
two years, being employed on shore as a stevedore, and on
The hull of a vessel was insured for a specified voyage the last occasion when he was at sea his ship had been lost
undervalued policies for a sum considerably in excess of her and his certificate suspended for six months. The captain of
market value. There were also taken out concurrent policies the vessel on the voyage in question was A. W. Sember. The
on freight and disbursements for sums out of all proportion “Gunford” sailed from Hamburg on the 12th October 1907,
to the risks at stake. The managing owner (who had carried with a full cargo of patent fuel, coke, and 13 tons machinery,
through the insurances) also effected on his own behalf on a voyage round Cape Horn to Santa Rosalia. In the course
further insurances for a large sum, the policies in respect of of this voyage, upon the incidents of which was not well
disbursements and the managing owner's own policies being logged in, she, on the 10th December 1907, went ashore
‘honour’ policies. The vessel proceeded on the voyage in near Cape San Roque and became a total loss.
charge of a master who had not been to sea for twenty-
two years, who had lost his last ship, and whose certificate The underwriters of the hull were not informed of the
had in consequence been suspended for six months. The master’s record, nor of the freight and disbursements
vessel was wrecked and became a total loss. policies or the policies on behalf of the manager.

The Gunford Ship Company Limited & Liquidator with In the Court of Session, 16th July 1910, The vessel having
Thomas Greig Hardie (the pursuers) bought a legal action become a total loss, and the owners suing under the policies
against Thames & Mersey Marine Insurance Company on the hull, held, affirming judgment of the First Division,
Limited (the defenders) seeking payment of 2000 pounds (1) that as the master’s competency was covered by the
underwritten by the defenders. If the insurances be split up warranty of seaworthiness there was no duty on the
they were as follows:—Upon hull, £19,000; on freight, owners to disclose to the underwriters his record,
£5500, the freight for the voyage being about £4800, of
which one-half had been paid in advance and was not at (2) that in the circumstances the master was not proved
risk; on disbursements P. P. I. policy worth £4600, and to have been incompetent so as to put the owners in
additional on hull and disbursements (including debts of ship breach of the warrant of seaworthiness; but, reversing
to her managing owners and others) against total loss, judgment of the First Division,
£6500. The Gunford was launched at the shipyard of Scott
& Co., Greenock, for Briggs, Harvie & Co., Glasgow in (3) that there was a duty on them to disclose the other
October 1892. She was sold to Francis Briggs & Co., Glasgow. policies of insurance, these being material
In 1897. The “Gunford” Shipping Company, Limited, was circumstances which would influence the mind of a
managed by Francis Briggs, by whom all the business of the prudent insurer in fixing the premium and determining
ship, including the employment of her officers and the whether he would take the risk, and that the policies
effecting of insurances, was transacted. were therefore voidable and the underwriters not
liable.
The actual value of the hull was about £9000. No insurable
interest could be shown in respect of the greater part of The defenders or appellants, the Thames and Mersey
the items stated to have been insured under the Marine Insurance Company, Limited, appealed to the House
odenomination of disbursements, and full indemnity for of Lords.
actual disbursements would, in the event of loss, be
The Insurance Times November 2024 31