American Maritime Documents, 1776-1860 - Stein, Douglas L.
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Documents Relative to Maritime Insurance Claims
Since the owners of the vessel and cargo did not usually escort their interests to their destination, the responsibility to initiate the claims process for loss or damage fell to the shipmaster. When these losses - termed "Averages" - occurred, the first action taken by the master upon arrival in port was to file a Note of Protest. This document was made before a notary public, consul, or other qualified official, by the master within twenty-four hours of the vessel's arrival. It is a short document, providing the briefest account of the damage suffered. The primary reason for making a Note of Protest was to establish the right to extend the protest in the future should it become necessary.
This extension of the protest, commonly referred to as a "Protest" was usually a more lengthy and detailed document, describing all the circumstances surrounding the average; the date, the time, the setting and striking of all sails, a characterization of the weather responsible for the damage, what was damaged, what was sacrificed for the mutual good, etc. It was intended to be a clear and accurate statement of the events of the voyage, and was executed before a qualified public official by the master accompanied by one or two other crew members who could vouch for and support the master's account.
The Protest was important because it provided the insurer with the information required for them to properly evaluate a claim. In addition it also released "the vessel from liability for damage to cargo or other claims."
In addition to the Protest, the master arranged for a survey of the vessel and/or cargo. Prior to having the survey done he should have inspected his vessel and made his own list of damages. Supplying this list to the surveyors could often insure a more accurate survey. Underwriters often had agents appointed in many major ports throughout the world who would assist in the selection of surveyors.
The result of the survey was a Survey Certificate, made out by the surveyors for the vessel or the cargo, which included a description of the damage and probably cause of same. A statement regarding the current condition of the vessel might be found, along with recommendations that certain repairs be made. The recommendations, however, were only advice, the master was in no way obligated to follow them.
A popular method a acquiring funds for repair without the assistance of the owners was through the use of Bottomry and Respondentia Bonds. This was expensive and the amount borrowed was limited as much as possible. In these circumstances at shipmaster borrowed the money necessary for repair from some individual or company in the port where he was, bonding the vessel (Bottomery) and/or cargo and freight (Respondentia ) as collateral for the loan. Premiums on Bottomry and Respondentia Bonds were high, since the lender was taking a large risk. If the vessel was subsequently lost before she returned to her home port, the lender lost everything, because the owner was not obligated to repay his debt. These creditors, however, could often obtain insurance on the amount loaned under Bottomry.
In maritime terms the word "average" is used to identify damages and expenses resulting form "perils to navigation" encountered during a voyage. More specifically there is General Average and Particular Average.
The average (i.e. loss) suffered by the voluntary sacrifice of cargo is known as General Average. Thus is a consignee's cargo was jettisoned in order to save the ship and the rest of the cargo, it would seem only right that the other consignees compensate the one suffering the loss, since they benefited from the act. The idea of general average contribution was grounded upon the principle of co-partnership between the owners of a ship and cargo, for mutual protection, and limited liability against the extraordinary dangers of sea travel. Expenditures accrued by the vessel as a result of the damages, such as towage, wharfage fees, surveyor's fees, and adjustment fees, were also included in the scope of general average. The amount contributed by each co-partner to the total in the event of a sacrifice was directly proportional to the value of his cargo after it was saved.
General Average was in no way connected with a policy of marine insurance. A contribution was required of every interested party regardless of whether or not they were