General Average vs Particular Average
A loss accepted to save the voyage is shared by everyone saved. An accidental partial loss stays with its owner.
In marine insurance, "average" means a partial loss. It has nothing to do with the condition of average in fire insurance. There are two kinds. A particular average is a partial loss that falls on one owner alone: seawater ruins 200 bags of a Surat trader's yarn in the hold, and that loss is his. A general average is a loss deliberately accepted to save the whole voyage, and everyone whose property was saved shares it.
The Marine Insurance Act 1963 defines both. Section 64 covers particular average and section 66 covers general average. Nearby sections deal with salvage charges (s.65), particular charges (s.64(2)) and sue and labour expenses (s.78), the three side costs candidates confuse with average itself.
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General Average vs Particular Average
What it is
General average (s.66)
An extraordinary sacrifice or expenditure, voluntarily and reasonably made in time of peril, to preserve property in a common adventure
Particular average (s.64)
A partial loss of the subject matter, caused by an insured peril, that is not a general average loss
Who bears it
General average (s.66)
Shared by all interests saved (ship, cargo, freight) in proportion to their values
Particular average (s.64)
The owner of the damaged property alone
Cause
General average (s.66)
A deliberate act by the master or crew
Particular average (s.64)
An accident: heavy weather, fire, collision, seawater
Example
General average (s.66)
Cargo jettisoned to lighten a grounded ship; port of refuge costs after an engine fire
Particular average (s.64)
Cartons of electronics wetted when a hatch cover fails
Recovery from insurers
General average (s.66)
Each interest's insurer pays that interest's contribution; a sacrifice can be claimed in full from the insurer first
Particular average (s.64)
Paid by the insurer of the damaged interest, subject to the policy terms
| Point | General average (s.66) | Particular average (s.64) |
|---|---|---|
| What it is | An extraordinary sacrifice or expenditure, voluntarily and reasonably made in time of peril, to preserve property in a common adventure | A partial loss of the subject matter, caused by an insured peril, that is not a general average loss |
| Who bears it | Shared by all interests saved (ship, cargo, freight) in proportion to their values | The owner of the damaged property alone |
| Cause | A deliberate act by the master or crew | An accident: heavy weather, fire, collision, seawater |
| Example | Cargo jettisoned to lighten a grounded ship; port of refuge costs after an engine fire | Cartons of electronics wetted when a hatch cover fails |
| Recovery from insurers | Each interest's insurer pays that interest's contribution; a sacrifice can be claimed in full from the insurer first | Paid by the insurer of the damaged interest, subject to the policy terms |
How a General Average Contribution Works
A container ship sails from Nhava Sheva for Jebel Ali. A fire breaks out in a hold; the master floods it and diverts to a port of refuge. The water damage to cargo in that hold and the port costs are general average.
- 1
The master declares general average
The shipowner appoints an average adjuster, who will prepare the general average statement, usually under the York-Antwerp Rules written into the bill of lading. The current version is the York-Antwerp Rules 2016, published by the Comite Maritime International.
- 2
Cargo is released only against security
Each consignee signs a general average bond, and the cargo insurer gives a general average guarantee. Without them, the shipowner can hold the cargo.
- 3
The adjuster values the saved interests
Say the ship is worth ₹60 crore, cargo A ₹25 crore and cargo B ₹15 crore: ₹100 crore in all.
- 4
The loss is spread rateably
If the general average loss is ₹2 crore, each interest contributes 2%: the ship ₹1.2 crore, cargo A ₹50 lakh, cargo B ₹30 lakh. The owner whose cargo was sacrificed is paid from this pool and also contributes on the value made good.
- 5
Insurers pay the contributions
Under section 66(5), an assured who pays a general average contribution recovers it from the insurer. Under section 73, if the interest was insured below its contributory value, the insurer pays only the proportion insured.
The Side Charges
- Salvage charges (s.65)
- Charges recoverable under maritime law by an outside salvor who saves property without a contract. Recoverable from the insurer as a loss by the peril that was avoided.
- Particular charges (s.64(2))
- Expenses incurred by or for the assured to preserve the insured property, other than general average and salvage charges. Drying wet cargo at an intermediate port is the usual example. They are not part of the particular average figure.
- Sue and labour (s.78)
- The assured's duty to take reasonable steps to avert or minimise a loss, and the insurer's promise to pay the cost. It is supplementary to the policy, so it is payable even if the insurer has also paid a total loss. General average and salvage charges are not recoverable under it.
- Free from particular average (s.76)
- A warranty that the insurer pays no partial loss except a general average sacrifice. Even then, salvage charges and sue and labour expenses remain payable.
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Not the Same "Contribution"
General average contribution is a sharing between the owners of ship and cargo under maritime law. The principle of contribution in IC-01 is a sharing between two insurers who cover the same loss. Same word, different parties.
How IC-11 Tests This
Expect a scenario (cargo thrown overboard, a tug hired, a hold flooded) and four labels to choose from. The essentials of a general average act are in the definition: extraordinary, voluntary, reasonable, in time of peril, for the common safety. The trap is calling accidental damage general average because many owners are affected, or treating salvage charges as particular average. The courseware also uses general average as its example of a trade meaning overriding the ordinary meaning of policy words.
FAQs
What is the difference between general average and particular average?expand_more
General average is a loss deliberately incurred to save the whole voyage, shared by every interest saved. Particular average is an accidental partial loss that falls only on the owner of the damaged property.
What is an example of general average in marine insurance?expand_more
A ship runs aground and the master jettisons part of the cargo to refloat her. The value of the jettisoned cargo is shared by the ship and all the cargo that reached port safely.
Is general average covered by marine cargo insurance?expand_more
Yes. The Institute Cargo Clauses cover general average and salvage charges, and section 66 of the Marine Insurance Act lets the assured recover a general average contribution from the insurer. If the cargo was underinsured, the recovery is reduced in proportion.
What are the York-Antwerp Rules?expand_more
International rules for adjusting general average, incorporated into bills of lading and charter parties. The current version is the York-Antwerp Rules 2016, published by the Comite Maritime International.
Next steps
- Marine Cargoarrow_forward
- Marine Hullarrow_forward
- Cargo Clausesarrow_forward
- Principle of contribution (IC-01)arrow_forward
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