General average and particular average losses are both marine insurance terms which are classified as partial losses. A partial loss under marine insurance is when only part of the insured property is lost or damaged and in which case the insured must be indemnified to the tune of the damaged part. A loss in a marine adventure can either be total or partial and as such any loss other than total loss would be classified as partial.
A partial loss therefore could either be a general average or a particular average loss .
Particular average loss. This is a partial loss or damage caused to any particular cargo or property where the damage is suffered by a particular interest. The damage or loss should be of a particular subject matter in which case the damage suffered cannot be partially shifted to others and the loss would be borne by the persons directly affected by the damage to the said cargo. Remember that it is a partial loss hence not the entire cargo or property would be damaged but a part of it. The damage could either be to the cargo or the ship.
A particular average loss with regards a cargo may either be depreciation in value of the cargo or a total loss of a part of it. For instance when part of a cargo is destroyed by say sea water or about 4 out of 10 of a number of cargoes are destroyed.
With regards the ship (hull or machinery), the damage must be caused to just a part of the ship and not a loss of the entire ship. For instance, damage to the propellers of a ship would be considered a particular average loss and the insured would be indemnified to tune of the damage caused. Indemnity may however depend on certain clauses in the insurance contract example “New for Old” in which case a new equipment would be acquired to replace the old one.
General average loss on the other hand refers to a loss that directly affects two or more interest in a common marine adventure unlike particular average loss which affects a particular interest only. This loss involves an extraordinary sacrifice reasonably made during a peril for the sole purpose of preserving other properties in a common marine adventure. This sacrifice could include throwing of some cargo over board (jettison), using cargo as fuel, cutting away of spare or sails etc. The act must however be extraordinary, beyond the normal routine work of the ship crew and master and the peril or danger that warrants such a sacrifice must also be more than the ordinary perils of the sea. The sacrifice in itself should be aimed at preserving the whole marine adventure and should be made for the common safety of all other interests.
The sacrifice could also be in the form of an extraordinary expenditure (general average expenditure) which includes money expended for the general safety of ship, cargo and crew with certain expenditures like charges for repairs, expenses incurred in lightening and reloading a vessel etc. A general average loss would require contributions from all the other interest (cargo owners) involved in the marine adventure to make good the sacrifices or expenses. This is known as general average contribution.
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