The Disbursements Warranty

The plaintiff owners of the sailing ship Gunford insured her with various underwriters for £19,000, a considerable over-valuation. The gross freight was also insured, as were the disbursements, which were covered by a ppi policy,in addition, the shipping manager effected ppi policies for his own protection.All in all, the insurance cover amounted to £35,800, when the property at risk only amounted to £14,000. When the defendant insurers had underwritten part of the hull insurance, they had been unaware of the existence of the other policies, or of the fact that the master of Gunford had not been to sea for 22 years. When Gunford was wrecked and totally lost, the defendants refused to indemnify the plaintiff for two reasons: (a) that the vessel was unseaworthly due to the incompetence of the master, and (b) that non-disclosure by the assured of the existence of the other policies amounted to the concealment of the material facts.

The House of Lords ruled that Gunford was seaworthly, but the failure by the plaintiff to inform the defendants of the over-insurance amounted to a non-disclosure of a material fact and , therefore , the insurers were nos liable.