The grounding of the Ever Given container vessel in the Suez Canal in late March was widely publicised in the media, particularly for the impact the issue had on global supply chains. However, for those with shipments on board the Ever Given there may have been an additional concern regarding who would pay for the salvage operation to re-float the ship.
Why would customers be concerned about who pays for the salvage operation?
Because the little known concept of General Average could mean that those with shipments on board would be responsible for a share of the costs of recovery. With what is reported to be a sizeable bill this will be extremely concerning for those who were uninsured for the risk.
What is General Average?
General average is a principle of maritime law that says all stakeholders in a sea venture proportionately share the losses resulting from actions taken to preserve the safety of the ship, it's crew or the rest of it's cargo and the voyage in case of emergency.
This could involve the costs of salvage or recovery and/or the costs of compensating customers whose goods were jettisoned (thrown overboard) for the common safety of the whole voyage.
What is the cost of General Average?
Typically the insurance adjustor will determine the costs each shipper is responsible for as a % of the value of their shipment.
An article on the website gcaptain.com gives an example of a 2018 fire onboard a container ship where the adjustor fixed the costs at 54% of cargo value.
In this example, for an uninsured Household Goods shipment valued at £30,000 this would mean paying an additional cost of £16,200 to get the shipment released.
There can also be significant delays for uninsured shipments as they may need to wait until the costs have been determined by the insurance adjustor before their shipment can be released.
How often is General Average declared?
According to Wikipedia there are several cases of General Average being declared in recent years:
- MV Hyandia Fortune - following an explosion and fire in 2006
- MV MSC Sabrina - after running aground in 2008
- Hanjin Osaka - following an explosion in the engine room in 2012
- Maersk Honam - following a fire in 2018
- Northern Jupiter - following an engine fire in 2020
- Ever Given - following grounding in 2021
This is not an exhaustive list, but as you can see whilst declaring General Average isn't a frequent occurrence, it does happen.
Does International Removals insurance cover General Average?
This will depend on your International Removals Company and their insurance policy, so you should check the terms and conditions carefully ensuring General Average coverage is specified.
At Bournes International Moves the insurance we offer our customers is an all risks policy, covering General Average and Salvage charges in full.
IMPORTANT: Most International Removals companies offer insurance as an optional add-on. If you have chosen NOT to take insurance from them, and have not arranged any other insurance that covers this risk then you will be personally responsible for covering any losses, including General Average and salvage.
Ensure your shipments are comprehensively insured
Whilst the frequency of ships declaring general average is fairly rare, it does happen, and the cost if it does is significant, that's why we advise all customers to ensure their shipment is comprehensively insured.