General Average is a principle of maritime law where if a ship or its cargo is damaged or sacrificed to save the whole vessel in an emergency, the ship owner and cargo owners must proportionally share the costs of losses. This can happen if a ship encounters a major storm or runs aground, requiring some cargo to be thrown overboard to save the ship. If a ship declares General Average upon docking, each cargo owner must contribute part of the value of their cargo based on the portion sacrificed to help those whose cargo was jettisoned. Purchasing cargo insurance is advised as it can protect businesses from unexpected charges if a General Average claim is made against a ship carrying their goods.

1. GENERAL
AVERAGE
EVERYTHING YOU NEED TO KNOW ABOUT
So, if your cargo happens to arrive unscathed on a ship
that declares a General Average — this happens more
often than you may think — you’ll be required to pay your
share before
your cargo
is released!
If the ship is caught in a major storm or runs aground
and some of the cargo must be jettisoned (thrown
overboard) to avert disaster. Once the ship docks, the law
of General Average would require each party whose cargo
landed safely to contribute a portion, based upon their
share of the cargo, to the party (or parties) whose goods
had been sacrificed.
General Average is a principle of maritime law that says if a ship
or its cargo sustains loss or damage as a result of a voluntary
sacrifice in an emergency, the vessel owner and cargo owners will
proportionally share the cost of those losses.
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Many businesses don't purchase freight insurance because they think it’s
unnecessary!
"My cargo is indestructible!"
"It’s not attractive to thieves."
"It’s not valuable enough to warrant insurance."
Sound familiar? Then know this...insuring your shipment
is always advised. Even if your goods aren’t worth a great deal.
WHY? Without insurance, you could get dinged with a significant charge if
a General Average claim is made on the ship your cargo travelled on.
A General Average law would be evoked:
GOOD NEWS! With the right
insurance, you won’t be on
the hook if a General Average
is declared on a ship carrying
your goods.
The savings and peace of
mind this offers — for a
relatively low cost — make
purchasing cargo insurance a
smart business decision.