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General Average

Education: Understanding General Average

General Average is a term used in the shipping industry to describe what the effect is on cargo owners when cargo, equipment or funds have to be sacrificed at the discretion of the ship's captain.  If the ship's master voluntarily sacrifices the cargo, equipment or funds to save the voyage, then all parties involved in the venture (including all cargo owners) are required to make a proportional contribution to cover the costs incurred.  So even if your cargo wasn't sacrificed, you will have a loss.  When a General Average is declared by the ship's master the cargo would not be released until cargo owners have put up a cash bond or the cargo insurers put up a General Average guarantee. 

Sales: How Can Understanding General Average Help Sell Cargo Insurance 

There is a high likelihood that importers/exporters will be involved in a General Average claim at some point.  Statistics show importers/exporters will be involved in a General Average claim once every 8 years and those claims can take up to 4 years to resolve.  Additionally, if cargo insurance is purchased through a carrier, it typically won't include coverage for General Average losses unless it is purchased separately.  All-risk policies written through Wyvern International include full coverage for General Average losses, which is a significant selling point when dicussing the advantages you can offer to your clients that ship internationally.