In this article, we will discuss Marine Insurance (Description Part-1). So, let’s get started.
An Overview of Risks Exposed during Transit
During the course of transit the cargo may be exposed to various risks despite adopting adeguate precautions in packing, transportation, loading unloading, selection of Carriers etc. The risks can be classified into two categories, depending on their causes:
– Normal risks during transit
– High risks during transit (War/SRCC or Terrorism)
– Normal risk is Particular Average
– High risk is General average
Particular Average
The Particular Average refers to physical loss or damage to the cargoes suffered by the insured
during a particular voyage/transit.
Depending upon the voyage, conveyance and nature of cargoes, the insured may suffer the following losses:
Loss or damage to cargo due to Sinking of vessels, Grounding, Stranding, Capsizing Collision, Fire, Earthquake, Volcanic eruption etc.
Loss or damage to cargo due to sea water river water, fresh water, washing overboard lost
overboard, entry of lake water, sea water into the vessel and place of storage, Condensation,
Contamination Heating and sweating oil stained, acid damage and mud damage etc.
Accident to the carrying conveyance, mishandling spillage shortage. Theft pillerage and non delivery of entire consignment etc.
In addition to physical loss or damage to cargo, the insured may also incur certain expenses at short of destination to avert or minimize the losses which are admissible under the policy.
General Average
Rule A of York Antwerp Rules 1994 provides definition of General Average as ” There is a general average act when, and only when any extra ordinary sacrifice or expenditure is intentionally and reasonably made or incurred for the common safety for the purpose of preserving from peril the property involved in a common mantime adventure’ The word “general” has been defined in Harris v Scaramanga case to mean that the loss is to be generally distributed, or the contribution to be generally made by all.
Example
(1) A ship had discharged nearly all its cargo when a fire broke out which necessitated the use of
water to extinguish it The remaining goods were thus damaged. It was held that the common
adventure was not at an end until all the goods are discharged and therefore the ship was liable
to contribute to the damage cargo
(2) The vessel put into a port of refuge to repair general average damage, which necessitated
discharge of cargo. It was held that the inward port charges, cost of discharging and warehousing cargo, together with the outward port charges and reloading cargo expenses were all general average.
