Particular Average Loss & General Average Loss in Insurance | Meaning | Differences

What are Particular average Loss?

Particular average loss are partial and unforeseen loss accidentally incurred by sea perils. When goods arrive at its destination, the surveyor inspects them and certifies their damaged condition. After survey, a statement of particular average is prepared.

Stages:

Particular average may be divided into the following stages:

1. Measures of the actual loss

Loss = sale price of goods — sale price of damaged goods.

2. Where the valued policy is taken, the actual measure of loss has to be adjusted on the basis of the amount insured.

3. Where the unvalued policy is taken, it is this amount which the insured can recover from the underwriter up to the sum insured.

4. In addition, insured can also claim certain charges i.e. survey fee, sales commission etc.

What are General Average Loss?

General Average is a loss which is caused by or directly consequential on a general average act.

Essentials:

The essentials of a general average are:

1. The loss must be the direct result of a general average act.

2. Sacrifice or expenses must be extraordinary in its nature.

3. The sacrifices must be intentional and not accidental.

4. It must be reasonable and prudent.

5. It must be done in times of peril.

6. Its object must be the preservation of the property and not the safety of any particular interest.

7. It must result in the preservation of the ship and a part of the cargo.

8. The common danger must not be the result of a default.

Differences between General Average Loss and Particular Average Loss

1. Types of Loss

General Average Loss is an extraordinary loss incurred to preserve the common interest. Particular Average Loss is partial loss accidentally insured by sea perils.

2. Type of situation

General Average Loss is a voluntary and deliberate loss. Particular Average Loss is purely accidental and unforeseen loss.

3. Possibility of insurance

The cause of General Average Loss cannot be insured. The  cause of Particular Average Loss can be insured.

4. Effect

General Average Loss affects general or common interest, hence termed general average. Particular Average Loss involves only particular property or interest.

5. Reasonableness

General Average Loss must be reasonable and prudent. There is no such condition for Particular Average Loss.

6. Nature of Loss

General Average Loss is an extraordinary character of general nature. Particular Average Loss is of ordinary character and of particular nature.

7. Sharing of Loss

In General Average Loss the loss shall be shared by all the owners of cargo. Particular Average Loss falls entirely upon the owner.