The Law of General Averages Means Needing Insurance



Depending on who you ask, the maritime rule of General Average goes back to as long ago as 800 BC. Not something a modern seafarer would dare to trifle with, but always something extremely unfortunate and difficult to implement in today’s complicated shipping world. To share out the cost of an overturned cargo could mean a bank-breaking bill for an SME. This was the case with a small Transport Specialist company here at home in Singapore (unnamed to preserve confidence).

In this particular scenario, when the carrying vessel took on water and had to divert to a port that wasn’t included on the itinerary, the shipowner himself declared General Average and stated uncategorizably that all of the costs incurred were to be shared among the cargo owners using the vessel to transport their cargoes overseas. This was to ensure that onward shipping would be possible, and indeed go ahead with minimal disruption to the schedule. Makes perfect sense, one would think. However, in this case, a number of the smaller containers were uninsured and so the additional cost of the General Average claim was to be absorbed by the specialist himself, not the insurance company. This situation could have easily been avoided by insuring with the comprehensive Multimodal Freight Liability Insurance, an insurance program specifically designed to meet the needs of SLA members, in partnership with Honan and Chubb.

Cargo is insured in almost any situation and at any level of operation.  From Bronze to Platinum cover, the policy covers, not limited to:

  • Local Transportation and Warehousing Liability – provides coverage for physical loss or damage to the cargo of others arising from your negligence.
  • Claims from damage to cargo handled by parties assigned by you but not in your care, custody or control.
  • Coverage is also provided when there is damage to cargo as a result of insufficient or inadequate packing, crating, bracing, wrapping, marking or cushioning; or improper selection, design or construction of crates, boxes or other containers when done by you or your sub-contractors.

To find out more about the Multimodal Freight Liability Insurance, please click here.

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