What is General Average in Marine Insurance

What is General Average in Marine Insurance？

General average refers to the special sacrifices and special expenses paid directly by the intentional and reasonable measures for the common safety of the ship, cargo and other property in the same sea voyage. Prorated system.

The Suez Canal has been blocked recently. Involves the nerves of the whole world

In 2020, an average of 50 cargo ships will pass through the Suez Canal every day, accounting for 12% of the global maritime logistics. It is a well-deserved important maritime logistics hub.

On the one hand, the blockage of the Suez Canal has caused hundreds of millions of losses to shipping worldwide. Some experts said that about 30 heavy cargo ships pass through the Suez Canal every day, and one day of blockage means that 55,000 containers are delayed in delivery.

The parties, Shoe Kisen, the Japanese owner of the ship "Ever Given", declared general average on April 1. 

General average charges include:

① Salvage reward

② The cost of reducing the load of the stranded ship and the damage caused thereby

③ Port of Refuge Fees

④ Wages and other expenses paid to seafarers to and from places of refuge, etc.

⑤ Repair cost

⑥ Substitute fee

⑦ Advance payment of handling fees and insurance premiums

⑧ Interest on general average losses, etc.

General average processing flow ↓

1. Once the general average is established, according to the maritime law, the carrier may dispose of the relevant goods within a reasonable limit without providing appropriate guarantees before paying the general average contribution to the carrier.

2. The carrier will send a letter to the cargo party, which states "Please pay special attention, unless the cargo party provides a guarantee to the owner's satisfaction, the shipowner will not release the goods", and a format guarantee letter is attached to the letter.

3. For the goods without total loss, they must sign the "General Average Agreement" before they can obtain their goods from the shipowner.

In short, the most important thing after the occurrence of general average is to provide a letter of guarantee for general average. The letter of guarantee is issued by an insurance company or a local inspection agency. If the ship is in the freight charter period, it may also be general average. The cause of the loss of the cargo must be something caused by the general average treatment.