Maritime Law and General Average Claims

Maritime Law and General Average Claims

Any business that regularly transports goods internationally realizes quickly that there are a multitude of rules and regulations involved. While many of these change frequently as countries reassess their trade policies, others have remained the same for centuries. One of the oldest mandates that still holds sway over today’s bustling global marketplace is the “General Average” rule. This rule dictates that under certain circumstances the responsibility for cargo lost while at sea is shared among all the businesses or individuals who held cargo on that vessel. Anyone looking to purchase cargo insurance and curious about cargo claims should become familiar with what constitutes a General Average loss and how it can affect them.

Events that Result in the Declaration of a General Average Loss Include:

  • Freight is jettisoned on purpose to keep the ship afloat in an emergency.
  • The vessel sustains damage while loaded.
  • Any other corrective action taken by the crew that results in extra expenses for the vessel owner or cargo owners.

If the damages and losses are extensive or involve expensive cargo, the amount you are responsible for can exceed the value of the goods you transported. Furthermore, a security deposit, or General Average Guarantee, is required to secure the release of any cargo not damaged in the incident. While General Average claims remain relatively rare, they do exist and have cost the unprepared millions of dollars. Learning about cargo claims and their intricacies while working with an insurance company familiar with how best to protect your interests is the best way to avoid these unexpected losses.


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