Marine Insurance - Average

Average

The term "Average" has one meaning:

Average in Marine Insurance Terms is "an equitable apportionment among all the interested parties of such an expense or loss."

1. General Average stands apart for Marine Insurance. In order for General Average to be properly declared, 1) there must be an event which is beyond the shipowners control, which imperils the entire adventure; 2) there must be a voluntary sacrifice, 3) there must be something saved.

The voluntary sacrifice might be the jettison of certain cargo, the use of tugs, or salvors, or damage to the ship, be it, voluntary grounding, knowingly working the engines that will result in damages.

"General Average" requires all parties concerned in the maritime venture (Hull/Cargo/Freight/Bunkers) to contribute to make good the voluntary sacrifice. They share the expense in proportion to the 'value at risk" in the adventure.

"Particular Average" is the term applied to partial loss be it hull or cargo.

1. Co-insurance – is the situation where an insured has under-insured, i.e., insured an item for less than it is worth, average will apply to reduce the amount payable.

An average adjuster is a marine claims specialist responsible for adjusting and providing the general average statement. An Average Adjuster in North America is a 'member of the association of Average Adhjusters' http://www.usaverageadjusters.org

To insure the fairness of the adjustment an General Average adjuster is appointed by the shipowner and paid by the insurer.