There may be total loss or partial loss:
(i) Total loss. If a ship is lost at sea , or if the cargo is completely destroyed , this is known as an actual total loss. If the cargo is so seriously damaged that it can no longer serve the purpose for which it was intended , or if the ship itself has to be abandoned , this is called a constructive total loss.
(ii) Partial loss. Frequently, however, a ship or its cargo may suffer only partial damage. In this connection the term average is used in marine insurance (and in fire insurance also ) to mean loss. Thus, there is general average and particular average.
General average occurs, for instance, if some of the cargo has to be jettisoned in order to secure the safety of the ship. In this case the loss is not borne only by the owners of cargo but also by the shipowners , since the loss was incurred in order to save the ship. Similarly, if the ship has damage and has to be towed into port the extra expense incurred in doing this will not fall entirely on the shipowners but also on the owners of the cargo, since it was in their interests too for the ship to be saved from total loss.
Particular average occurs when part of the cargo or the ship suffers damage, and where the partial loss is entirely borne by either the owners of the cargo or the shipowners , as the case might be. If, for example , the ship was in collision any damage would be the responsibility of the shipowners; on the other hand, if sea water, shipped while the vessel had struggling through heavy seas, should damage the cargo that would be the responsibility of the owners of the cargo. Thus, a policy taken out “with particular average” provides insurance against all risks at sea, but if it is “free of particular average, “ then cover is provided only against total loss and general average.
In the case of partial loss the extent of the damage has to be assessed by an independent official, know as an average adjuster. In order to secure international uniformity in the adjustment of general average, the York-Antwerp Rules were drawn up.
(i) Total loss. If a ship is lost at sea , or if the cargo is completely destroyed , this is known as an actual total loss. If the cargo is so seriously damaged that it can no longer serve the purpose for which it was intended , or if the ship itself has to be abandoned , this is called a constructive total loss.
(ii) Partial loss. Frequently, however, a ship or its cargo may suffer only partial damage. In this connection the term average is used in marine insurance (and in fire insurance also ) to mean loss. Thus, there is general average and particular average.
General average occurs, for instance, if some of the cargo has to be jettisoned in order to secure the safety of the ship. In this case the loss is not borne only by the owners of cargo but also by the shipowners , since the loss was incurred in order to save the ship. Similarly, if the ship has damage and has to be towed into port the extra expense incurred in doing this will not fall entirely on the shipowners but also on the owners of the cargo, since it was in their interests too for the ship to be saved from total loss.
Particular average occurs when part of the cargo or the ship suffers damage, and where the partial loss is entirely borne by either the owners of the cargo or the shipowners , as the case might be. If, for example , the ship was in collision any damage would be the responsibility of the shipowners; on the other hand, if sea water, shipped while the vessel had struggling through heavy seas, should damage the cargo that would be the responsibility of the owners of the cargo. Thus, a policy taken out “with particular average” provides insurance against all risks at sea, but if it is “free of particular average, “ then cover is provided only against total loss and general average.
In the case of partial loss the extent of the damage has to be assessed by an independent official, know as an average adjuster. In order to secure international uniformity in the adjustment of general average, the York-Antwerp Rules were drawn up.
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