General Average Clause

The General Average clause is a core concept in international trade and marine insurance. It refers to the special sacrifices or extraordinary expenses intentionally and reasonably incurred to preserve the common safety of the ship, cargo, and other property when they are exposed to a common peril during maritime transport, which are shared proportionally by the parties benefiting from the sacrifice. This clause is commonly found in bills of lading, charter parties, and insurance policies. In marine insurance, particularly under FPA and WA coverage, general average sacrifices and contributions are usually recoverable. Application scenarios include: jettisoning cargo when a ship runs aground, intentional grounding to extinguish a fire, and extra expenses at a port of refuge. Note: General average differs from particular average, which concerns only the interests of a specific party and is borne by the affected party alone; general average must be an intentional measure taken for the common safety. In addition, general average adjustment is complex, usually requiring a professional average adjuster and following the York-Antwerp Rules. Foreign trade practitioners should clearly define the general average clause in contracts, ensure insurance coverage, and avoid losses arising from contribution disputes.