loss average

Answer

The term "Loss Average" (more commonly referred to simply as "Average" in marine insurance and shipping law) means a partial loss of or damage to a vessel, her equipment, or her cargo during a voyage.

There are mainly two types of average losses:

A Particular Average is a partial loss caused by an insured peril, which is not a General Average loss.

Example: Heavy weather damages No. 1 cargo hold and some cargo. The hull damage is borne under the ship's H&M insurance and cargo damage under the cargo policy. Other cargo owners do not contribute.

General Average arises when there is an extraordinary sacrifice or expenditure, intentionally and reasonably made for the common safety to preserve property involved in a common maritime adventure from peril.

Classic example: Ship catches fire. The Master uses large quantities of water to extinguish it, damaging some cargo. If the requirements for GA are met, the resulting qualifying sacrifice/expenses are shared among the ship, cargo and freight interests according to their contributory values.