General Average (GA)
General Average (GA) is a long-standing maritime principle where all parties involved in a sea voyage, such as the shipowner and cargo owners, share financial losses if part of the cargo or vessel is intentionally sacrificed to save the entire voyage. This could include actions like jettisoning cargo, flooding holds to extinguish a fire, or incurring extraordinary expenses during emergencies. GA ensures that no single party bears the entire loss when the sacrifice benefits everyone.
When a general average event occurs, the ship declares GA, and an average adjuster is appointed. All cargo owners must contribute in proportion to the value of their goods. Before cargo is released at the destination, consignees typically provide a GA bond or GA guarantee as security for their share. This ensures that everyone involved participates fairly in covering the loss, repairs, or special expenses incurred.
GA applies only to voluntary sacrifices or extraordinary costs made to preserve the voyage. Ordinary operational losses, mechanical failures, or weather delays are not considered general average. Cargo owners often rely on marine insurance to cover their GA contributions. Without insurance, the financial burden could be significant, as contributions depend on the total value at risk.
Overall, the general average promotes fairness and cooperation in maritime transport. It allows the ship’s master to act quickly during emergencies without worrying about financial responsibility falling on one party. By sharing losses proportionally, GA protects the interests of all stakeholders and ensures the voyage can continue safely.
Frequently Asked Questions about General Average (GA)
Clear answers to the most common questions people have when learning about General Average (GA).
GA is declared when the ship intentionally incurs a loss or sacrifices cargo to save the vessel and remaining goods, such as during fires, grounding, or severe emergencies.
Yes. All cargo owners must contribute proportionally based on the value of their cargo, unless their marine insurance covers the GA contribution.
It ensures that consignees commit to paying their share of GA costs. The cargo may not be released until this guarantee is submitted to the adjuster.