O insured their vessel for 9 million dollars under a hull policy. P bank had agreed to advance money against a mortgage over the vessel. A loss payable clause in favour of the bank was in indorsed on the hull policy. In addition the bank entered into its own MI policy with D being an underwriter who insured the vessel for the bank in the sum of 6.85 million dollars. The vessel was lost and hull underwriters declined to pay, contending that the vessel was deliberately cast away. P brought an action under the MI policy. P admitted to liability but disputed quantum. The case turned on the meaning of the words ‘insured amount’ in the MI policy.
Held: 1)the value stated in the whole policy was irrelevant; 2) the policy was not a valued policy within the terms of section 27(2) of The Marine Insurance Act 1906 and 3) the measure of indemnity was to be ascertained by reference to her market value.
(1985) 1 Lloyds Rep 264
England and Wales
Updated: 21 May 2022; Ref: scu.623912