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Section 53 of The Marine Insurance Act, 1963

Where the assured has parted with or lost his interest in the subject-matter insured, and has not, before or at the time of so doing expressly or impliedly agreed to assign the policy, any subsequent assignment of the policy is inoperative: Provided that nothing in this section affects the assignment of a policy after loss.

Summary

If a person sells or loses their interest in the insured property, they generally lose the right to transfer the insurance policy to someone else.
To make a transfer valid after losing interest, there must have been an agreement to assign the policy made before or at the time the interest was lost.
This rule does not stop someone from transferring a policy after a total or partial loss has already happened.
The provision prevents people from selling insurance policies for property they no longer own or have a stake in.

Practical examples

1Vikram sells his cargo of spices to a buyer on March 1. He does not mention the insurance policy during the sale. On March 15, he tries to assign the policy to the buyer. This transfer is invalid because he had already lost his interest in the spices without an agreement to assign the policy.

2Anita owns a ship that sinks. Even though she no longer has a functioning ship, she can still legally assign her insurance policy to her bank under the exception for transfers after a loss.

FAQ

1. What happens if I sell my ship and try to assign the insurance later under Section 53 of the Marine Insurance Act, 1963?

Under Section 53 of the Marine Insurance Act, 1963, if you did not agree to assign the policy before or during the sale, any later assignment is inoperative and has no legal effect.

2. Does Section 53 of the Marine Insurance Act, 1963 prevent me from assigning a policy after a shipwreck?

No, Section 53 of the Marine Insurance Act, 1963 specifically provides that the rules do not affect the assignment of a policy after a loss has occurred.

3. Is an agreement to assign the policy required under Section 53 of the Marine Insurance Act, 1963?

Yes, Section 53 of the Marine Insurance Act, 1963 requires an express or implied agreement to assign the policy made before or at the time of losing interest in the property.

Test yourself

Q1.Under Section 53 of the Marine Insurance Act, 1963, when is a subsequent assignment of a policy inoperative?

Q2.According to the proviso in Section 53 of the Marine Insurance Act, 1963, what is specifically allowed?

Q3.Under the Marine Insurance Act, 1963, if a seller transfers a ship to a buyer under Section 52, what must they do to comply with Section 53?

Q4.What is the legal status of an assignment that violates Section 53 of the Marine Insurance Act, 1963?

52PreviousSection 52 When and how policy is assignable.54NextSection 54 When premium payable.

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