Particular Loss : There are two types of partial losses as explained below:
General Average: Sometimes a ship owner either sacrifices some cargo the ship is carriage or incurs some expenditure which becomes necessary to save the journey. So a sacrifice or expenditure will have to be shared-by the interests in the saved journey. Thus, the insured will be protected from paying for the loss. Partial loss or Average of this natt ac is known as
General Average or GA and comes into being only when the ship carrying cargo arrives safely. If a ship is lost and does not, therefore, arrive a1 the ultimate destination, there can be no GA.
GA is defined as "an extraordinary sacrifice or expenditure intentionally and reasonably made or incurred for the common safety for the purpose of preserving from the peril, the property involved in a common maritime adventure. In other words, GA arises by either sacrificing (or destroying) the property (say, cargo) or incurring an expenditure (say, expenses to bring ship to safety). But the sacrifice tex pedicure must arise out of some extraordinary events, which might lead to loss to all the parities in the adventure Journeys). Further, the sacrifice expenditure must be made knowingly but prudently and reasonably.
Regarding GA, an accepted principle of maritime law is "that all who expose their property to maritime perils are in it together and should share in any misfortunate on an equal basis". In other words, GA sacrifices expenditure is to be shared by all interest in the journey, i.e., the cargo owners, ship owners and freight earners.
GA expenditure can be understood clearly from the following examples:
i) Some cargo is thrown into the sea to lighten the ship in rough weather;
ii) Water is poured on cargo (not on fire) to extinguish a fire;
iii) Expenses are incurred to tow a ship in the danger of sinking to the safety of the port;
iv) A part of cargo is burnt to maintain steam in the ship's boilers when the ship runs short of fuel due to delay caused by heavy weather.
The sharing of GA sacrifice or expenditure by the three parties to the adventure is done in accordance with the intemationa1l.y agreed Rules, known as the York-Antwarp Kules 1974.
The working out of the shares and the preparation of the G.4 statement is entrusted to an Average Adjuster who is an expert in the field. When the ship arrives at tile destination port, it is declared to be on general average by the ship owner and an Average Adjuster is appointed. The Average Adjuster will draw up the statement of percentage of GA contribution by each cargo owner and calculate the value of shares of all interests. The
Ship owner then requires all these interests including cargo owners to pay a GA deposit and execute bond. Thereafter, cargo will be released to the cargo-owners. The ship owner may, however, deliver the cargo against either an underwriter's (insurance company's) or a banker's guarantee. On completion of final adjustment, the excess, if any, is to be paid by the cargo-owner by honouring the bond.
Where the cargo-owner has an insurance policy, he will recover the GA contribution or the loss suffered by him from the insurance company. All marine policies cover GA loss and sacrifice and the insurance companies settle claims for GA contribution and normally refund GA deposits.
Particular Average: It is defined as partial loss or damage caused accidentally by a peril insured against. Thus, when such a loss takes place, there is to be no contribution from other interest in the journey, as in the case of General Average loss. It becomes payable only when it is covered in the policy.