Marine Cargo Insurance – General Average
Marine cargo insurance is a type of insurance that provides coverage for the loss or damage of goods that are transported by sea. General average is a legal concept that arises in the context of marine cargo insurance. It is a loss arising out of a voluntary sacrifice made of any part of a shipment or cargo to prevent loss of the whole and for the benefit of all persons concerned.
In order for the general average to apply, the following three conditions must be met:
- There must be an accident or peril at sea.
- The accident or peril must have endangered the ship, its cargo, and/or its crew.
- Some part of the ship, its cargo, and/or its crew must have been sacrificed in order to save the whole.
If these conditions are met, then the shipowner, cargo owner, and underwriter are each responsible for their respective share of the loss. The share is determined by the value of the property saved. For example, if the total value of the property saved is $100,000 and the shipowner’s share is 10%, then the shipowner would be responsible for $10,000 of the loss.
The concept of general average has been in existence for centuries and is still an important part of marine cargo insurance today. It provides protection for all parties involved in a shipment in the event that something goes wrong during transit. If you are shipping goods by sea, be sure to discuss the general average with your marine cargo insurance provider to make sure you are adequately covered.
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