MARINE INSURANCE-Continued Average. Before dealing with the clause in the Policy, beginning "Corn, Fish, Salt," &c., it is necessary to explain the meaning of the word "average." In every day affairs we use the word to express the mean of two or more numbers, but it is not used in this sense in marine insurance matters. As used in marine policies the word has two meanings. It signifies (1) a contribution by the underwriters towards losses or expenses which have been incurred for the benefit of all the parties interested, and (2) a payment to be made by the underwriters for partial loss or damage sustained by the property insured. It will thus be seen that there are two kinds of average, viz.: (1) where all the parties are affected, (2) where only some of the parties are affected. The first of these two kinds is termed— General Average. This signifies that the owners of the ship and cargo generally are liable to make a pro rata contribution towards any losses sustained or expenses incurred where other property or part of the ship has been sacrificed for the general good and for the safety of the ship and cargo generally. For example, if a ship were in distress, from stress of weather or from liability to capture, &c., and the captain, in order to lighten her, were to throw overboard (or jettison, as it is termed) a portion of the cargo, or cut away the masts, cables, &c., the act would be for the general safety of the ship and the remainder of the cargo; therefore the owners of the ship and the various owners of the cargo (including that lost) would have to make a general contribution pro rata to cover the loss incurred. The following example of general average and the mode of adjustment (based on a case which actually occurred) will perhaps explain the matter more clearly. A small steamer ran ashore (or "stranded") on an island in the north of the Adriatic Sea, whilst on her way to Fiume en route to Trieste, and in order to be got off had to transfer her cargo into lighters. During this operation some of the cargo was lost and other portions damaged, and the steamer lost two anchors, several cables, and other gear. She was finally towed off by two Government steamers, and then put into the nearest port, where she took on board a quantity of ballast, in order to proceed to Trieste to be docked and repaired. In the meantime the cost of leaving the cargo in lighters was found to be so great (owing to the number of lighters employed and the hire thereof) that another steamer was chartered to load the cargo and deliver it at Trieste. The following is merely a summary of the "Average Statement" in this case, which, we may mention, covers over 160 foolscap pages and gives particulars of all the cargo and damage sustained, as well as the charges incurred and the apportionment of general and particular average between the various interests concerned. The actual details have been altered in several instances in order to make the matter intelligible to the general reader, this chapter not being written for insurance experts. The term "particular average" is explained further on. Steamer "Blanco," London to Naples, Fiume, and Trieste. STATEMENT OF GENERAL AVERAGE AND PARTICULAR AVERAGE OF THE VESSEL. The total general average losses, amounting to £3,000, are equal to 15% on the value of the ship, freight, and cargo originally taken on board; therefore the general average payable by each party is 15% on the value of his interest, thus: It will be noticed that the shipowner and A, B, C, and D have each to both pay and receive, the net amounts they receive being respectively £1,820, £35, £80, and £10, in all £1,945, which is equal to the amounts due from D, E, F, and G. The amounts paid would be claimed from the underwriters as general average. The amounts realised by the sale of the damaged portions would be paid to the underwriters. The formalities which have to be observed by the captain of a vessel when his ship and cargo have suffered damage such as would constitute a claim on the underwriters are dealt with in the chapter on "Ships and Shipping." Particular Average is a loss which is not a general average loss, and which falls exclusively on the owner or other person interested, giving him no right of contribution against other persons. For example, if, while being hoisted on board, a bale of goods were to slip from the ship's slings and fall into the sea, or if, during bad weather, the sea were to break into the ship's hold and damage a portion of the cargo, the loss thus incurred would have to be borne by the owner of the particular goods lost or damaged, or, if they were insured subject to particular average, by the underwriters. When damaged goods are landed they are "made merchantable," if practicable, and then sold for what they will fetch. The amount realised is deducted from the sound value, the balance being recovered from the underwriters, if the goods were insured subject to particular average. An illustration of the mode of adjusting "particular average" is given on the following pages. The term general average is generally abbreviated thus, GA; particular average thus, P/A. When it is desired to cover particular average, the term generally used is All Risks or A/R, or sometimes W.A. (with average). When only general average is covered, this is indicated by the initials f.p.a., i.e., "free of particular average," meaning that the underwriters are not liable for any claims for particular average. Average Statement. The statement showing the amounts payable or receivable by the different parties interested is called an Average Statement, and is prepared by a specially qualified person called an average stater or average adjuster. This statement is based on the surveyor's report as to the condition of the goods, and the invoices and other documents furnished by the interested parties. The Average Statement is usually made out at a port near the scene of the accident. The method of adjustment varies somewhat in different countries; therefore, in order to avoid any difficulties on this score, it is usual to insert in the policy the words "To pay general average as per foreign statement" (abbreviated f.g.a., i.e., foreign general average), meaning that the underwriters will pay general average claims adjusted in accordance with the laws of the foreign country where the Average Statement is drawn up. "YorkAntwerp Rules" refers to certain rules as to average, agreed to at a conference held at York, and revised at a later conference held at Antwerp. |