Article 313 of the Saudi Commercial Maritime Law
المادة 313 من النظام البحري التجاري · الفصل الأول: الأحكام العامة
The article allows agreeing to exempt the insurer from compensation within limits set by the contract, deducted from the compensation unless full compensation is agreed once damage exceeds the limit, calculated after deducting ordinary shortage.
Official text (Arabic)
This article has not been amended since the law was issued.
1- يجوز الاتفاق على إعفاء المؤمِّن من التعويض عن الضرر في الحدود التي يعينها العقد، ويخصم مقدار الإعفاء من مبلغ التعويض, ما لم يتفق على استحقاق التعويض كاملاً إذا جاوز الضرر حد الإعفاء.
2- في جميع الأحوال يحسب الإعفاء بعد خصم النقص العادي الذي يصيب الشيء المؤمن عليه أثناء الطريق.
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 313 explained in plain English
This article regulates what is known in practice as the exemption or deductible in insurance:
Permissibility of the exemption (Paragraph 1): it is permissible to agree to exempt the insurer from compensating for damage within the limits set by the contract. The effect:
- As a rule, the amount of the exemption is deducted from the compensation.
- Unless it is agreed that full compensation is due if the damage exceeds the exemption limit.
Method of calculation (Paragraph 2): in all cases the exemption is calculated after deducting the ordinary shortage that affects the thing insured on the way. The ordinary shortage is excluded first, and then the exemption is applied to what remains.
The difference between the two methods in Paragraph 1 is important: under the first the insured always bears the amount of the exemption, while under the second he receives full compensation once the damage exceeds the agreed limit.
Article 312 excludes the ordinary shortage of goods from the insurer's liability in the first place, and Article 314 sets the insured's obligations, including paying the premium and exercising reasonable care to preserve the thing insured. To understand an exemption clause in a particular policy, it is advisable to consult a lawyer specialized in insurance.
Practical example
A shipment insurance policy contained an exemption of SAR 10,000, and damage worth SAR 50,000 occurred after deducting the ordinary shortage. The insured receives SAR 40,000, unless it is agreed that full compensation is due once the damage exceeds the exemption limit, in which case he receives SAR 50,000.
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 313 of the Saudi Commercial Maritime Law
May a maritime insurance policy include a deductible?
Yes. It is permissible to agree to exempt the insurer from compensating for damage within the limits set by the contract.
How is the exemption calculated?
The amount of the exemption is deducted from the compensation unless it is agreed that full compensation is due once the damage exceeds the exemption limit, and in all cases it is calculated after deducting the ordinary shortage.
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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.