Do You Need Cargo Insurance?
We all hope that nothing will happen to your cargo and for the vast majority of shipments this hold true but things do go wrong, so can you afford to lose the cargo? For airfreight and road freight this should be a commercial decision however for ocean freight you need to figure an additional potential cost into your cost calculation " General Average"
A legal principle which traces its origins in ancient maritime law, general average is still part of the admiralty law of most countries. The first codification of the general average principle were the York-Antwerp Rules of 1890 which were supplemented and amended in 1924, in 1949 and in 1974.
General Average Requires Three Elements
"1st. A common danger: a danger in which vessel, cargo and crew all participate; a danger imminent and apparently 'inevitable,' except by voluntarily incurring the loss of a portion of the whole to save the remainder.
"2nd. There must be a voluntary jettison, jactus, or casting away, of some portion of the joint concern for the purpose of avoiding this imminent peril, periculi imminentis evitandi causa, or, in other words, a transfer of the peril from the whole to a particular portion of the whole.
"3rd. This attempt to avoid the imminent common peril must be successful".
Whilst loss of cargo is rare it does occassionally happen. Click here for a few examples.