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Loss by Stowaways Causing A Fire - 1921

There Is an interesting case being discussed in the street this week involving cotton underwriters. Cotton on board a steamer was set on fire by stowaways who had hidden themselves among the bales stowed in the bridge deck.

Their presence remaining undiscovered until the fire broke out. It is thought that in attempting to light a match the stowaways accidentally set fire to the cargo.

This case involves a mooted point in the law of marine insurance, and not withstanding that a marine insurance policy specifically states that it covers against fire there is a question as to the liability of the underwriters for this loss.

Many authorities hold that an under writer is liable for all losses which occur through the happening of an insured peril irrespective of the causes which set in motion the peril. The only exception to this rule, according to the authorities, being those policies which contain a provision excluding Ioss by the peril named.

Under this ruling if a 4055 by fire is caused by stowaways, as fire is one of the insured perils the underwriters are liable unless their policies contain a clause specifically excluding loss by stowaways or words of a similar intent.

Thus if a fire is caused by the negligence of the crew, the underwriter is liable simply because fire is an insured peril and the causes responsible for the fire are immaterial, the doctrine of proximate cause not being involved.

The other view of this question leads to the conclusion that the underwriters are not liable in the case of the fire caused by the stowaways. The ground for this conclusion being based on the fundamental principle that marine insurance was created for the purpose of covering fortuitous losses and that a fortuitous loss does not contemplate the careless or intentional act of a party who bears no relationship to the venture.

For example, this latter group contends that it is not necessary to specifically exclude from the policy losses caused by strikes inasmuch as it was never the intent of the policy to cover losses through the acts of strikers, unless amounting to a civil commotion.

This latter view would admit liability for a fire loss caused by a member of the crew inasmuch as such a loss is one of the fortuitous happenings to which a sea venture is ordinarily subjected and would deny liability for the stowaway damage on the same reasoning.

The carrier is in all probability liable under the American law for a loss of this kind, but that fact does not of itself excuse the underwriters from their liability.

Howel, Charles F., Ed., “Marine Insurance: Loss by Stowaways,” in The Weekly Underwriter, New York: Underwriter Printing & Publishing Company, Vol. CV, No. 25, 17 December 1921:1164

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