Published 16 Dec 2020
What is General Average?
Often, a ship in distress with cargo can be saved by the captain's considered actions. This is known as general average. The law of general average is a principle of maritime law whereby all stakeholders in a sea venture proportionally share any losses resulting from a voluntary sacrifice of part of the ship or cargo to save the whole in an emergency.
If the ship faces a sudden threat, such as a storm, some cargo may need to be removed from the ship. In this case, since the discarded cargo will save the entire ship, the cargo owners and the ship owner are responsible for their share of the total assets on the ship, regardless of whom the discarded cargo belongs. If these people have transport or ship insurance, their replacement insurers will be responsible.
The concept of a common average allows sailors to act without hesitation in the face of a sudden threat and the sacrifice made is shared fairly.
The concept was first introduced into legislation by the York Antwerp rules in 1890. U.S. companies adopted the rule in 1949.
In what cases does General Average condition apply?
Conditions that must be provided
Three elements of the General Average
Bouncers made without general average conditions are paid only by the owner of the property. This condition is called special average. In the damage investigations of transportation insurance, it is important whether the average is general or particular.