General Average is a legal principle in Marine Insurance where all parties who are involved in a voyage, are asked to share proportionally the losses resulting from a catastrophe.

In this article, we look at what could lead to a General Average claim and what happens when General Average is declared on a vessel. 

First, let us take a look at what could cause a General Average to be declared.

Here are a few catastrophes that can lead to a General Average Claim if they get out of hand:
  1. A fire on board – Which could arise out of the incorrect declaration of hazardous cargo 
  2. The ship getting stranded or grounded due to machinery breakdown
  3. A stack collapse on board a container ship
  4. The boat getting caught in hazardous weather

In the event of such a catastrophe, all cargo is seized. And the cargo owners are held responsible for sharing, proportionally, in the total loss, even if their shipment was not damaged. To have their cargo released, cargo owners need to put up a cash bond or the cargo insurers’ will put up their General Average Guarantee to get the goods released. 

The captain is responsible for the safety of the vessel, cargo and crew and is charged to do everything he/she needs to do to maintain their safety. 

Captains may sometimes need to go to extraordinary measures to protect their charge and could damage cargo to preserve the overall safety of the vessel and crew.

Here are a few extraordinary measures that a captain might need to take that could also ultimately lead to a General Average Claim:  
  1. Jettisoning some cargo because it is affecting the stability of the ship. Or to reduce the weight of the vessel to refloat a grounded a ship.
  2. Make a distress call at the nearest port, which was not part of the declared route. 
  3. Do emergency repairs where the cargo becomes damaged.

In such cases, General Average is declared as the damages were incurred to protect the overall safety of the entire vessel.

Don’t be caught off guard when catastrophe strikes the vessel transporting your valuable goods.

Talk to us to make sure you are covered should a General Average claim arise. First International Portfolio Managers are experts in Marine Insurance and will ensure that you and your valuables are fully covered.