Shipping goods over the sea involves many risks, from weather damage to unexpected emergencies. In such cases, marine insurance becomes a crucial safety net. One of the unique concepts under this insurance is the idea of general average in marine insurance.

What is general average in marine insurance?

To put it simply, the general average in marine insurance refers to a situation where all parties involved in a sea voyage—cargo owners, shipowners and others—share the loss if part of the cargo or ship is sacrificed to save the rest. This could be during a fire, grounding or when the ship is in danger and part of the goods must be thrown overboard to stabilise it.

Here’s an example of general average in marine insurance:

If a ship is caught in a severe storm and the crew throws cargo overboard to stop it from capsizing, the resulting loss is shared among all stakeholders, not just the cargo owner.

This concept is different from a particular average, where only the party suffering the loss bears the cost. This practice is guided by general average in maritime law, specifically under the York-Antwerp Rules. It helps ensure fairness when difficult decisions are made for the common safety of the voyage.

Rules from the general average clause in marine cargo insurance

The general average and marine insurance connection is explained in the general average clause found in a standard marine insurance policy. Some key rules include:

• Loss must be intentional and for the common good.
• The action must be extraordinary, like flooding cargo holds to stop a fire.
• There must be a real threat to the entire voyage, not just to one party’s goods.
• All contributing parties must be notified and documentation must be provided.

Your marine insurance can help cover your share of such a loss. It’s a shared risk model that builds trust between trading parties and ensures financial balance during emergencies.

Conclusion

Understanding the general average in marine helps you prepare better for emergencies at sea. Whether you're shipping goods occasionally or regularly, knowing your rights and obligations under marine insurance can make a big difference. Make sure your marine insurance policy covers general average situations so you’re not caught off-guard if something goes wrong mid-voyage.

Disclaimer: The information provided in this blog is for educational and informational purposes only. It is advised to verify the currency and relevance of the data and information before taking any major steps. Please read the sales brochure / policy wordings carefully for detailed information about on risk factors, terms, conditions and exclusions. ICICI Lombard is not liable for any inaccuracies or consequences resulting from the use of this outdated information.