Meaning
Maritime law protocols distribute the losses incurred during an emergency sacrifice of cargo or equipment among all voyage stakeholders. Under the principle of general average, each cargo owner contributes proportionally to make whole the losses sustained for the common safety of the vessel and its shipment. It applies only to intentional acts of sacrifice during a shared maritime peril.
Emergency Sacrifice
Vessel masters sometimes choose to jettison cargo or flood specific compartments to save a grounding ship from total loss. These deliberate actions trigger the application of general average to share the resulting financial burden. Unintentional damage or losses caused by standard rough weather are excluded from this system.
Loss Apportionment
Specialist adjusters calculate the value of the saved vessel and cargo to determine the contribution required from each participant. This process of general average requires all parties to provide financial security before their remaining cargo is released at the port of discharge. Security is usually provided via average bonds or insurer guarantees, ensuring that the financial burden of the salvage operation or cargo sacrifice is distributed fairly among those whose property was saved from destruction.
Financial Security
Cargo insurance policies frequently cover the contributions demanded under maritime emergency declarations. When general average is declared, the lack of appropriate coverage can lead to prolonged cargo detention at the terminal. Shippers must present the necessary documentation promptly to prevent their supply chains from grinding to a halt.
