Valuation by Services in Marine Loss

Specifically, the provisions are:

  1. Com, fish, salt, fruit, flour, and seed, etc., are warranted free from particular average unless the ship is stranded.
  2. Sugar, tobacco, hemp, flax, hides, and skins, etc., are warranted free from particular average unless the ship is stranded or unless amounting to 5%.
  3. All the other goods are warranted free from particular average unless the ship is stranded or unless amounting to 3%.

The stranding of the ship vitiates the memorandum and renders insurers liable for any particular average which has occurred on the voyage irrespective of the franchises mentioned.

The percentage has to be taken into consideration in ascertaining whether the franchise is reached, but when attained the damage is paid in full.

If the particular average reaches the stated percentage, the insurer becomes liable in respect of the whole loss and not merely for the excess over the franchise or exemption limit.

As has been mentioned above, the particular average loss can be claimed only when it exceeds ‘certain fixed percentage’ of the total value of the goods.

But this limit or percentage may account for a huge amount when a very large amount has been insured.

In such a case, it will work as a great hardship to the assured as he will have to suffer this partial loss himself.

In order to lessen the rigors of memorandum clause, the subject-matter is divided into sections known as ‘series’ and the franchise i.e., the exemption limit will be considered for each series separately for the purpose of calculating particular average loss.

The subject matter may vary according to the type of interest, packing, original localities.

The last series which does not fulfill the required limit or amount is called tail series. A tail series is dealt with a complete series. The assured is free to recover particular average in respect of each series separately.

Particular average on ship

In case of partial loss of ship the following factors are considered:

  1. Where the ship has been repaired, the assured is entitled to the reasonable cost of the repairs less the customary deductions. The amount of repair shall not be more than the sum insured.
  2. Where the ship has been only partially repaired; the assured is entitled to the reasonable cost of such repairs, reasonable depreciation.
  3. If the ship has not been repaired and has not been sold in her damaged state during the risk, the assured is entitled to be indemnified for the reasonable, depreciation arising from the unrepaired damage.

The measure of indemnity for particular average is the reasonable cost of repairing the damage less the customary deductions ‘new for old’.

If the damaged parts of the ship are old then the insurers are obliged to indemnify the insured only to the extent of the value of the old parts.

But when new parts are added, the difference between the value of the new parts and the value of the old parts are made.

Insurers are liable for the cost of repairing particular average damage to the ship irrespective of the insured or actual value of the ship where temporary repairs are necessary the insurers are liable for such repairs in addition to the permanent repairs.

Where a ship cannot be repaired at the port of refuge, cost of removal to another port is regarded as part of the cost of repairs. Extra expenses involved in ‘over-time’ working are not allowed.

Particular average in case of freight

Where there is a partial loss of freight, the measure of indemnity is such proportion of the sum fixed by the policy in the case of a valued policy, or of the insurable value in the case of an unvalued policy as the proportion of freight lost by the assured bears to the whole freight at the risk of assured under the policy.

Difference between General Average Loss and Particular Average Loss

  1. General average is incurred for the benefit of all interests but the particular average is in connection with any of the interests
  2. General average is always voluntary and intentional but the particular average is accidental or fortuitous.
  3. General average is shared by all those who are benefited by the general average act Particular average is paid by the insurer
  4. The general average may include expenditure and sacrifice along with loss, whereas the particular average results from a loss or damage.

Types of general average loss

The general average losses are divided into two classes; general avenge sacrifices and general average expenditure;

  1. General avenge sacrifices: The general average sacrifices are made for common safety. For example ‘jettison’ which means throwing away of the cargo in order to lighten the ship. Similarly, the use of cargo as fuel, cutting away of a spare and sails.
  2. General average expenditure: The general average act involves expenditure. In this case, extra expenditures are involved for the common safety. Here, additional charges are incurred at the port ship is repaired; expenses may be involved for lightening and re-loading of the cargo.

Salvage charges

Salvage charges are those recoverable under maritime law by a salvor independent of contract. It is the remuneration or reward payable according to maritime law to salvors who voluntarily and independently of contract render services to rescue or save property at sea i.e. Hull, cargo, and freight.

No reward for services or payments for loss or expenses can be claimed by salvors where the services were unsuccessful and the property was totally lost.

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