October 12, 2015
Claims Corner: General Average
A vessel was en route from Miami to Colombia when it experienced engine failure. To secure the vessel’s stability, crew members jettisoned 110 containers overboard and a General Average was declared. General Average claims require all cargo owners on a vessel to contribute to the loss. Even if your cargo isn’t damaged, a contribution based on the total value of all of the ship’s cargo must still be made to get the cargo released.
In this situation, the value of the vessel was $75 million and the value of the cargo on board was $135 million, making the total value of the voyage $210 million. Because of the jettison and engine damage, cargo loss and vessel repairs totaled $50 million. Therefore, $50 million out of $210 million, or 23.8 percent, of the voyage suffered a loss. Each cargo owner was forced to contribute 23.8 percent of the value of their cargo before it was released. Luckily, the insured purchased Cargo Insurance and the insurance company posted the General Average Bond and Guarantee to meet the cargo owner’s contribution and facilitate release of the cargo.
Claim Amount: $20,840.23
Insured’s Deductible: $0
For more information on Cargo Insurance, contact email@example.com or visit our cargo insurance product page.