Premium Note

Section 52 of The Marine Insurance Act 1906 related with the time on
with premium is payable and stipulate as “Unless otherwise agreed, the duty of the
assured or his agent to pay the premium, and the duty of the insurer to issue the
policy to the assured or his agent, are concurrent conditions, and the insurer is not
bound to issue the policy until payment or tender of the premium.”

Note

The date on which premium is due can be modified by the parties’

agreement.

Section 53 of The Marine Insurance Act 1906 related with the policy
effected by the broker and provided as-

(1) Unless otherwise agreed, where a marine policy is effected on behalf of

the assured by a broker, the broker is directly responsible to the insurer for the
premium, and the insurer is directly responsible to the assured for the amount
which may be payable in respect of losses, or in respect of returnable premium.

(2) Unless otherwise agreed, the broker has, as against the assured, a lien
upon the policy for the amount of the premium and his charges in respect of
effecting the policy; and where he has dealt with the person who employs him as a
principal, he has also a lien on the policy.

In Hunter v. Wright (1830) case, a clause in the policy stated that the
premium was returnable if the vessel was "sold or laid up". After being laid up for
several months she was again employed during the currency of the policy. It was
held that no premium was returnable upon the ground that the clause did not cover
a temporary laying up.

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 In Pyman v. Marten (1906) case, it was stated in the policy that the
premium was returnable if the vessel was sold or transferred to new management,
it was held that her capture did not satisfy this condition and the premium could
not be claimed by the assured.

Section 54 of The Marine Insurance Act 1906 related with effect of

receipt on policy and stipulate as- “Where a marine policy effected on behalf of the
assured by a broker acknowledges the receipt of the premium, such
acknowledgment is, in the absence of fraud, conclusive as between the insurer and
the assured, but not as between the insurer and broker.”

Illustration

A instructs B, a broker at Hartlepool, to insure his ships. B employs C,

another broker at Liverpool, to effect the insurances. C has a lien on the policies
for the premiums and charges, even though A may have paid B.

Note

When a broker arranges a marine insurance policy for the assured, two direct
responsibilities are established, these are Broker’s Responsibility for Premium and
Insurer's Responsibility for Claims or Refunds. In simple terms, the broker is
directly accountable to the insurance company for paying the premium and the
insurer expects payment directly from the broker.

The amount of premium is normally fixed in the policy from the beginning.
Some policies may contain a clause which requires additional payment of premium
by the assured to provide coverage in some defined circumstances. In The
Moonacre [1992] ,the insurance contract excluded coverage in case the yacht, the

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subject matter insured, was used as a houseboat unless this was notified to the
insurer and additional premium was arranged for such coverage.

Therefore, the premium is the payment made by the assured to the insurer
for the insurer’s promise to undertake the risks which was specified in the
insurance policy and to indemnify the assured if the loss occur.