General Average

This is a partial loss where the loss of the cargo belonging to an individual is shared by everyone because the loss is deemed to have benefited all involved in the venture. A general average loss may occur, for example, when: a) part of the cargo is sacrificed to save the entire venture b) part of the vessel is sacrificed to save the entire venture c) a ship and cargo are saved by unloading and reloading a stranded vessel d) water used to extinguish a fire, damages cargo (damage by fire would not be general average) e) cargo is lost due to it being used a fuel because no other is available, this may only be applicable if the action is undertaken to save the whole venture. The foregoing are only examples; the list is by no means exhaustive. The principle behind General Average is that as, all the parties benefited from the sacrifice, they should all contribute to the cost of saving the venture in proportion to the value of their property. To establish each party’s contribution, the list of expenses is passed to specialists known as Average Adjusters. To ensure that all the parties involved pay their share, their cargo is only released in exchange for an Average Bond plus in some cases an Average Guarantee. The latter document will be provided by the cargo owner’s insurers and if it is not forthcoming the carrying line may demand an actual cash deposit from the consignee. General average is a highly complex subject and those students needing a more extensive knowledge are recommended to study the Marine Insurance course. The practical steps, which have to be undertaken by agents attending ships, which have declared General Average, are contained in the courses covering specialist subjects.