November 18, 2025
Sea Freight
For as long as ships have crossed open waters, sea trade has shaped the rise and fall of economies. With new trade routes being introduced and global supply chains increasing in complexity and diversification, shipping remains a risky business.
At the helm of risk management and financial security for cargo owners lies General Average, a longstanding maritime principle that works by sharing the financial responsibility and burden that ships undergo when encountering danger at sea.
What is General Average?
General Average is a legal principle that prioritises fairness and equality, stating that financial responsibilities as a result of encountering peril (for example, enemy attacks or storms) shall be distributed amongst shareholders to ensure the onus is not placed on a single entity.
General Average may have ancient roots, but even as shipping has modernised, the principle (set out in the Marine Insurance Act 1906) has stayed largely the same. The idea of General Average in the shipping industry has persisted due to the risks the trade endures, risks that are only exacerbated by the arrival of mega-ships and the turbulence of global politics.
Perhaps the most famous and more recent example of a General Average claim being implemented is the Ever Given vessel blocking the Suez Canal in 2021. After being stuck for six days, the Ever Given’s captain declared General Average to remedy the costs of the delay.
Cargo owners wanting to take out a General Average claim, after facing an unsafe situation at sea, will need to follow a distinct criteria for a General Average claim to be validated.
Criteria for a General Average claim
| Your claim has to be extraordinary | General Average claims won’t pay out for any routine or operational costs, such as refuelling or vessel maintenance. The claim made has to be because an extraordinary sacrifice or expense has had to be carried out. |
| Your actions have to be intentional | The ship’s master and onboard crew must proactively work to prevent greater loss in the face of disaster. This could look like jettisoning cargo to prevent the vessel from sinking, or deliberate collision to avoid a more extreme and costly impact. |
| Your effort must be successful | The sacrifices made must meaningfully contribute to the preservation and protection of the vessel, cargo, and crew on board. A successful effort will allow justification of the losses stakeholders will have to take on, and ascertain the rationale for invoking General Average. |
General Average in marine insurance contracts
Marine insurance contracts will often incorporate conditions for General Average contributions, which typically allow the insured parties to receive reimbursement for their share of the costs.
The York-Antwerp rules are usually included in the policies’ fabric which standardise how General Average claims are managed worldwide.
How to mitigate the risk of a General Average claim
The financial impact of a General Average claim can be quite significant, especially if the cargo loss was high-value or the damage incurred required expensive repairs. Cargo owners must be prepared to carry the economic weight of a General Average claim, even if their own goods were not directly impacted during the disaster.
There are ways to alleviate the impact that a General Average claim may cause:
- Take out comprehensive insurance: Don’t scrimp on a marine insurance policy. Make sure there is a General Average claims section of the agreement and that it benefits you in the case of a perilous situation.
- Understand the contract: Review the terms set out between the carrier and the customer and the bills of lading to understand the liability at stake and expected responsibilities.
- Know your freight company: Only work with trusted professionals who will work with you through a situation where a General Average claim needs to be made.
General Average exists to protect shipowners, cargo owners and the voyaging vessels, and it’s not leaving maritime law anytime soon. General Average can be a lifeline in situations of maritime peril, spreading costs so no single party bears the full financial burden.
However, having a General Average clause in your marine insurance policy is essential to ensure your company isn’t exposed to significant losses that could affect future operations. If you’re unsure about your current contract or would like to work with an established, trusted freight forwarding provider, get in touch with our team.