Freight Insurance. Character of the Freight Interest.

    This branch of the marine insurance business relates to the third most important interest in maritime ventures. In this country the word " freight " is customarily used to refer to the cargo itself, but in marine insurance it is important, to avoid confusion, to bear in mind that the term has reference to "money payable either for the hire of a vessel or for the conveyance of cargo from one port to another."

    Unlike cargo and hull interests, the freight interest is an intangible one, which grows out of the contract denning the relation between the owner or charterer of a vessel and the owner of the goods delivered for shipment. As Templeman explains: " It is apparent that freight of itself is not capable of sustaining actual, i. e., physical, depreciation by perils insured against in the same way as a vessel or goods. To constitute a particular average on freight, therefore, there must be a partial loss in respect of it." 2 The intangible character of the interest is probably responsible for most of the difficulty encountered by the average student in understanding this apparently mysterious branch of the marine insurance business. But a further element of confusion arises from the varying terms contained in the numerous contracts of affreightment which give rise to the freight interest. These contracts differ widely as to the time of payment of freight money and other obligations imposed upon the parties thereto, and often bring about a situation whereby some risks connected with the freight interest are borne by one of the parties, while other hazards are at the risk of the other party. Since the agreement between the owner or charterer of the vessel and the owner of the goods to be shipped by the vessel contains the fundamental conditions upon which the freight interest is based, it follows that the employment of a variety of such contract forms will necessitate a corresponding variance in the conditions governing the freight insurance.