general average clause

In maritime law, "average" refers to loss or damage to a ship or its cargo that is less than total, caused by sea perils. There are two types: particular average, borne by the owner of the damaged property, and general average, shared by all parties involved in the venture.1

General average is a more significant concept, involving voluntary sacrifices made to save the rest of the property. For instance, if cargo is thrown overboard during a storm to save the ship, the owners of the saved property contribute to compensate the owner of the sacrificed cargo. This principle has ancient roots in Roman law and is recognized globally.1

The general average clause in marine insurance mandates that insurers of various interests share the costs of losses intentionally incurred to save a voyage from total destruction. These sacrifices must be voluntary, necessary, and successful. For example, if cargo is jettisoned to save the vessel, insurers of the hull and other cargo interests contribute to the loss.2