Article 305 of the Saudi Commercial Maritime Law
المادة 305 من النظام البحري التجاري · الفصل الأول: الأحكام العامة
The article regulates several insurance contracts on one risk exceeding the thing's value: the contracts stand, the insured claims within the damage and the true value, must declare the other insurances, and the contracts may be annulled for fraud.
Official text (Arabic)
This article has not been amended since the law was issued.
1- عدا حالة الغش, إذا كان الخطر مؤمناً منه بعدة عقود, سواء كانت مبرمة في تاريخ واحد أو في تواريخ مختلفة, وكان مجموع مبلغ التأمين المذكور في هذه العقود يزيد على القيمة الحقيقة للشيء المؤمن عليه, عُدت عقود التأمين صحيحة, وجاز للمؤمن له الرجوع -في حدود الضرر وبما لا يزيد على القيمة الحقيقة للشيء المؤمن عليه- على من يختاره من المؤمِّنين المتعددين وبغير تضامن بينهم بنسبة مبلغ التأمين الذي يلتزم به كل منهم إلى القيمة الحقيقية للشيء المؤمن عليه.
2- يجب على المؤمن له الذي يطلب تسوية الضرر الذي لحق به أن يصرح للمؤمِّن بوجود التأمينات الأخرى التي يعلم بها, وإلاَّ كان طلبه غير مقبول.
3- يجوز لكل مؤمن الرجوع على المؤمنين الآخرين لمطالبة كل منهم بحصته من الضرر بنسبة المبلغ الذي التزم به، فإذا كان أحدهم معسراً وزعت حصته بالنسبة ذاتها على المؤمنين الموسرين.
4- في حالة ثبوت الغش من المؤمن له، يكون كل عقد من عقود التأمين المتعددة قابلاً للإبطال بناء على طلب المؤمِّن, وللجهة القضائية المختصة عند الحكم بإبطال العقد أن تقضي بالتعويضات المناسبة لمن يستحقها بما لا يتجاوز قسط 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 305 explained in plain English
This article deals with insuring the same risk under several contracts whose total sums exceed the true value of the thing insured.
Where there is no fraud (Paragraph 1):
- The contracts are considered valid, whether concluded on one date or on different dates.
- The insured may claim against whichever insurer he chooses, within the limits of the damage and not exceeding the true value.
- Without joint liability among them, and in proportion of the sum insured each is liable for to the true value.
Duty to declare (Paragraph 2): the insured who asks for settlement of the damage must declare to the insurer the other insurances he knows of, otherwise his claim is inadmissible.
Recourse among insurers (Paragraph 3): each insurer may claim against the others for the share of each of them in the damage in proportion to what he undertook, and if one of them is insolvent his share is distributed in the same proportion among the solvent ones.
Where there is fraud (Paragraph 4): each contract is voidable at the insurer's request, and when annulling it the competent judicial authority may award appropriate compensation to those entitled to it not exceeding the insurance premium.
This case differs from a single contract with several insurers in Article 304. To assess the position of several contracts, it is advisable to consult a lawyer specialized in insurance.
Practical example
A company in Dammam insured a shipment worth SAR 1,000,000 with two insurance companies under two contracts, each for SAR 800,000, without fraud. If the shipment is lost, it may claim against whichever of them it chooses within the limits of the damage and not exceeding SAR 1,000,000, and it must declare the other contract to the one it claims from, otherwise its claim is inadmissible.
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 305 of the Saudi Commercial Maritime Law
May the same goods be insured with more than one company?
Yes. Except in the case of fraud, the contracts are considered valid even if their total exceeds the true value, but recourse is within the limits of the damage and not exceeding the true value.
Must I tell the insurance company about the other insurances?
Yes. The insured who asks for settlement must declare the other insurances he knows of, otherwise his claim is inadmissible.
What is the rule on multiple insurance with fraud?
Each contract is voidable at the insurer's request, and the competent judicial authority may award appropriate compensation not exceeding the insurance premium.
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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.