What Is General Average in Maritime Insurance?
General Average is a clause in Maritime insurance, which is defined under section 66 of the Marine Insurance Act 1963. A General Average in Maritime Insurance is a ‘sacrifice’ made by the assured in order to prevent the insured articles from getting damaged. The sacrifice of goods must be made voluntarily and reasonably to preclude the more significant cause. General Average loss rarely takes place. However, when it occurs, an insured may lose millions of dollars of cargo and the vessel while protecting human life.
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- What Is General Average in Maritime Insurance?
History of General Average in Maritime Insurance
The General Average in Maritime Insurance was first codified under the York Antwerp Rules of 1890. Later, in 1949, it was recognised by American companies. Gradually, the General Average in Maritime Insurance was incorporated by several countries, including India, in order to enshrine it in the marine insurance laws. The York Antwerp Rules remain in force and have been updated several times since 1890.
Elements of General Average in Maritime Insurance
Barnard v. Adams:
In this case, Mr. Justice Grier stated three elements required to form General Average in Maritime insurance. If any of these elements is absent, the insured party cannot claim damage under the marine insurance policy.
Listed below are three elements stated by Justice Grier:
- First, there must be a common danger to all participants in the cargo. The threat must be imminent and inevitable for the crew of the ship.
- The risk could only be avoided by voluntarily sacrificing fewer portions of the ship in order to save the large portion.
- The attempt to avoid the imminent peril and save the ship must be successful.
Conclusion
General Average in Maritime Insurance is an act or sacrifice committed by the crew or insured to prevent the total loss of the ship. However, the surveyor can determine if the claim meets the essential elements of the General Average in Maritime Insurance. Upon proper examination, the insured may get indemnified for the losses incurred.
