Article 302 of the Saudi Commercial Maritime Law
المادة 302 من النظام البحري التجاري · الفصل الأول: الأحكام العامة
The article allows the insurer to annul the contract if the sum insured exceeds the value of the things insured and fraud is proved, otherwise the contract is valid up to their value, and limits the insurer to the sum insured if it is lower.
Official text (Arabic)
This article has not been amended since the law was issued.
1- للمؤمن طلب إبطال العقد, إذا كان مبلغ التأمين يزيد على قيمة الأشياء المؤمن عليها، وثبت التدليس من جانب المؤمن له أو وكيله. وفي هذه الحالة يكون للجهة القضائية المختصة أن تحكم للمؤمِّن بمبلغ لا يتجاوز قسط التأمين, ومراعاة ما لحقه من أضرار. فإن انتفى التدليس عُدَّ العقد صحيحاً بمقدار قيمة الأشياء المؤمن عليها.
2- إذا كان مبلغ التأمين أقل من القيمة الحقيقية للأشياء المؤمن عليها, فلا يلتزم المؤمن إلاَّ في حدود مبلغ التأمين.
This is the official Arabic wording, the only legally binding version. We do not translate the law itself; the explanation below is ours. Official source: Bureau of Experts at the Council of Ministers
Article 302 explained in plain English
This article deals with a mismatch between the sum insured and the true value of the things insured, in two cases:
First: the sum insured is greater than the value (Paragraph 1):
- If fraud is proved on the part of the insured or his agent: the insurer may ask for the contract to be annulled, and the competent judicial authority may award him a sum not exceeding the insurance premium, taking into account the damage he has suffered.
- If there is no fraud: the contract is considered valid up to the value of the things insured, that is, it is reduced to the true value.
Second: the sum insured is less than the value (Paragraph 2): the insurer is liable only up to the sum insured. Someone who insures for less than the true value cannot claim more than the sum for which he insured.
In both cases insurance does not become a source of profit, and the insurer's obligation does not exceed what was agreed. Article 301 regulates an increase in risk while the policy is in force, and Article 303 voids insurance concluded after the things have been lost or have arrived, if it is proved that the news had reached the places specified in it before the contract was concluded. To assess your position in a particular case, it is advisable to consult a lawyer specialized in insurance.
Practical example
A merchant in Jeddah insured a shipment whose true value is SAR 300,000 for SAR 500,000, without fraud. The contract is valid only up to SAR 300,000. Had he insured it for SAR 200,000, the insurer would be liable on loss only up to SAR 200,000.
Translated from our Arabic explanation with machine assistance. For guidance only; it does not replace advice from a lawyer on your situation.
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Frequently asked questions about Article 302 of the Saudi Commercial Maritime Law
What if I insure my goods for more than their value?
If fraud is proved, the insurer may ask for the contract to be annulled and be awarded a sum not exceeding the premium; if there is no fraud, the contract is considered valid up to the value of the things insured.
What if I insure for less than the true value?
The insurer is liable only up to the sum insured.
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لا يصرح للسفن التي تحمل جنسية المملكة بالسفر إلى المناطق التي تغلب عليها أخطار الحرب, أو أعمال القرصنة أو السطو المسلح, إلا بعد تقديم مالكها أو مجهزها أو مستأجر
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يقع باطلاً كل اتفاق يتم قبل وقوع الحادث الذي نشأ عنه الضرر, ويكون موضوعه أحد الأمور الآتية: 1- إعفاء الناقل من المسؤولية عن هلاك البضائع أو تلفها. 2- تعديل عبء
- Article 236
The carrier must hold insurance or a guarantee from a recognized body covering its liability for death and bodily injury, and the injured party may claim directly against the insurer or guarantor.
يجب أن يكون لدى الناقل تأمين أو ضمان من جهة معترف بها، لتغطية مسؤوليته عن الوفاة والإصابات البدنية. وفي هذه الحالة يجوز للمتضرر الرجوع المباشر على المؤمن أو الض
- Article 293
The article provides that the maritime insurance provisions apply to an insurance contract covering maritime risks, without prejudice to the Law on Supervision of Cooperative Insurance Companies.
دون إخلال بالأحكام الواردة في نظام مراقبة شركات التأمين التعاوني, تسري أحكام هذا الباب على عقد التأمين الذي يكون موضوعه تغطية الأخطار البحرية.
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The article requires a maritime insurance contract and any change to it to be proved in writing, sets the particulars of the insurance policy, and makes a provisional policy binding on both parties until the final policy is issued.
1- لا يثبت عقد التأمين وكل ما يطرأ عليه إلاَّ بالكتابة. 2- يصدر بموجب عقد التأمين وثيقة تأمين تتضمن البيانات الآتية: أ- تاريخ عقد التأمين ومكانه. ب- اسم المؤمِّ
- Article 295
The article allows a maritime insurance policy to be issued in the name of the insured, to his order or to bearer, and gives its lawful holder the right to claim compensation, subject to the insurer's defenses against the insured.
1- تكون وثيقة التأمين باسم المؤمن له أو لأمره، أو لحاملها. 2- يكون لحامل الوثيقة الشرعي الحق في المطالبة بالتعويض, وللمؤمِّن أن يحتج في مواجهته بالدفوع التي يجو
The texts are reproduced from the official website of the Bureau of Experts at the Council of Ministers for reference; where they differ, the officially published Arabic text prevails. This content is not legal advice.