General Average
In the event of a major breakdown, fire, or other
serious event in which the vessel cannot continue the voyage, the
master may claim “general average.” If such a decision is made by
the carrier, owners of all cargo aboard must share the cost of either
repair of the ship so it may continue the voyage, or in a worst case,
the cost of replacement of the entire vessel.
If the protection against financial loss provided by cargo
insurance weren’t enough, the process of recovering your goods after an
accident is often much easier with an insurer working on your behalf.
During shipping, sometimes it can be necessary to make a voluntary
sacrifice to save the vessel, cargo or crew from peril, (e.g. jettison
of cargo to extinguish a fire). If some of the shipment is saved, all
parties contribute to the loss based on their cargo’s value. This also
is known as “general average,” and it is a clause used in almost all
ocean bills of lading. Cargo insurance will handle all arrangements in
such cases. But if the cargo isn’t insured, it won’t be released
until the shipper posts a guarantee, such as a cash deposit or bond for
its share of responsibility.