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Fire stricken ship demonstrates the practical value of Marine Insurance


News that General Average has been declared on the container ship APL Vancouver which caught fire on 31st January, with approximately 4,500 containers on board, is a timely reminder to discuss the implications of this age old principle of maritime law.  

News that General Average has been declared on the container ship APL Vancouver which caught fire on 31st January, with approximately 4,500 containers on board, is a timely reminder to discuss the implications of this age old principle of maritime law.   

When a vessel, crew and its cargo are facing a total loss at sea, action needs to be taken by the ship’s master to secure the safety of all concerned.  Time constraints in these situations don’t allow for discussions about which cargo to jettison and which to leave, and in order to balance the interests of all parties the principle of General Average was introduced in 1890.

General average is a global maritime principle that states that damages and salvage costs are shared among the ship and cargo owners in proportion to their value.

General average losses require the coordination of local and global marine claim professionals to quantify and manage the loss and interact with local authorities, while arranging the financial guarantee security, and communicating with the various interests involved in the venture. The owners of undamaged cargo will be required to confirm their contribution by way of a financial guarantee before their cargo is released while their final contribution is calculated, sometimes years later.

Shippers with cargo on the APL Vancouver face weeks of uncertainty over the status of their shipments and the details of what General Average security will be needed.

Fires on container ships are becoming more common, vessels are getting bigger, they are carrying more containers and the risk of a General Average loss is increasing.  However, it is estimated that more than half the number of containers shipped globally are not insured and therefore have no cover for General Average liability.  As a result shippers of salvaged cargo may have their goods auctioned to pay General Average expenses.

If cargo is insured, the insurance company provides the General Average guarantee (bond) and any contribution required for the loss. The potential financial loss from a General Average claim underlines the importance of All Risks Cargo Insurance and makes this an essential business decision.

To obtain a quotation for Marine Cargo insurance contact the team at Franklands on 01332 545720.

Source: http://mfame.guru/will-general-average-ga-be-declared-on-the-apl-vancouver/

             https://gcaptain.com/apl-vancouver-general-average/

 

 

 

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