Accidents are unforeseen. If and when anything like an accident occurs, there is always a loss of life and property accompanying an accident. Maritime accidents are no different. There is a term associated with maritime accidents that hold extreme significance – General Average.
General Average is a principle establishing that all the cargo stakeholders will equally share the damage or losses that occur due to the sacrifice of a specific part of the cargo or the vessel to save the ship in time of an emergency. General Average can be labeled as the aftermath of a maritime catastrophe. Companies that offer maritime services such as ship inspection, vetting, and auditing, also determine the General Average.
What is the Purpose of General Average?
The main motive behind this principle has always been to compensate the party who has suffered extreme financial loss due to the whole catastrophe. The origin of General Average goes back to the York-Antwerp Rules, but these have been modified from time to time to adapt to the modernized supply chain conditions. The rule states: “There is a General Average Act when, and only when, any extraordinary sacrifice or expenditure is intentionally and reasonably made or incurred for the common safety to preserve from peril the property involved in a common maritime adventure”
A General Average Bond is also signed, beforehand, by all the cargo owners which ensures that if and when the general average happens, all the parties will contribute accordingly. With this bond, they are obliged to provide financial security.
With this, General Average is calculated, and every party who suffers any loss will then be credited with the value of their respective losses and will be charged a percentage of their own property’s value to pay for any shared costs and other’s loss of property.
Once the vessel or ship owner declares General Average, a neutral third-party, General Average Adjuster is appointed to determine the losses and the applicable costs that are individually owed to and by the stakeholders involved in the voyage. It is the job of an adjuster to undertake the ship condition assessment and determine whether the losses qualify for General Average and which ones, the complete cost of the incident, and the amount individually owned by all the parties. Any affected cargo is not released to their cargo owners until the General Average is guaranteed.
The risk borne by every party is equal in every aspect. The share of each party in the General Average is not determined by the “fault-based approach”. However, if the actions of a particular party led to losses, legal actions can be taken against them.
General Average: A Task for Marine Specialists
Calculating the losses for General Average is something that marine specialists can perform. In the event of a General Insurance claim, expert knowledge can assist one in a quick resolution of the claim and minimize the disruption that the suffering party experiences.
At Sinotech Marine, we have multiple teams of qualified and professional marine experts across the world who can calculate the General Average effortlessly. Our diligent professionals can procure accurate results and detailed reports to determine the amount of cost owed by parties in total and individually. Determining General Average isn’t something for the shipowners or crew members. It requires accuracy, error-proof reports, and seasoned supervision. Sinotech Marine offers just the right assistance for the same!