General Average VS Particular Average

General Average:
1. General average is an ancient form of spreading the risk of sea transport and existed long before marine insurance. General average means general loss‘, as opposed to a particular loss under marine insurance.
2. It is defined in the rules of YORK-ANTWERP rule as ― There is a general average act when and only when any extraordinary sacrifice or expenditure is intentionally and reasonably made or incurred for the common safety for their purpose of preserving from peril, the property involved in a common maritime adventure.
3. The general average loss are shared by all parties to the common maritime adventure, each parties contributing proportions depend on his share of total value saved. The parties involved in the common maritime adventure are

Shipowner

Each consignee

The recipient of the freight (Shipowner/ Charterer)

When any equipment is installed on the vessel by a third party, he also a party

4. The five major components of a general average loss is therefore

An extraordinary sacrifice or expenditure

Which action taken was intentional or voluntary and not inevitable.

And reasonably made

Against a peril

In order to benefit the common venture

e.g., Damage is done when overworking a ship's engine while afloat to prevent grounding in ordinary‘, whereas damage done to engines, when already aground, in attempting to re-float the vessel is a GA‘, since this is an extraordinary Act.

Particular Average:

It is a partial loss, proximately caused by a peril insured against and which is not a general average loss. Thus, structural damage proximately caused by collision, grounding, heavy weather, etc. (perils of the seas) would normally be caused as a PA loss.

Particular average, instead of being contributed by the general body of those who are interested in the adventure, falls entirely upon the particular owner of the property, which has suffered from the damage. Such an owner has a claim against the insurer in proportion to :

Degree by which the damage sustained may have diminished the value that the property has to him, and

To the sum that the insurer has agreed to insure.

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