General average
A shared bill when something is sacrificed to save the whole venture.
Definition
A rule of maritime law older than insurance: where an extraordinary sacrifice or expenditure is intentionally and reasonably made for the common safety of the ship, the cargo and the freight at risk, every interest contributes to that loss in proportion to its value. The modern codification is the York-Antwerp Rules, a private set of rules incorporated by the contract of carriage rather than by statute; the current edition was adopted by the Comité Maritime International in 2016. Contribution is owed by every cargo owner on the ship, including those whose own goods were untouched.
Why it decides money
It is the one loss where undamaged cargo still costs the owner money, and the bill is not small. Institute Cargo Clauses (A), (B) and (C) all cover the general average contribution, which is a large part of why even cheap cover is worth holding.
Related terms
- York-Antwerp Rules
- The private code that decides how general average is adjusted.
- General average bond and guarantee
- The security you post to get your cargo released after a GA declaration.
- Salvage charges
- What salvors are owed for saving property at sea, recoverable under the cover.
More in claims and recovery
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