The loss of goods transported by sea, also known as Average, sea damage, refers to the loss of goods caused by maritime risks in the process of sea transportation. Average also includes the loss of goods in the process of land transportation and inland river transportation connected with sea transportation. Loss at sea may be divided into total loss and partial loss according to the degree of loss.

Total loss

Total loss, also known as total loss, refers to the total loss, actual total loss and constructive total loss of the insured goods. Actual total loss refers to the total loss or deterioration of the goods so that they no longer have any commercial value. Constructive total loss means that the goods have been damaged at risk, although not to the extent of actual total loss, but the actual total loss is inevitable, or the sum of the cost of avoiding the actual total loss and the cost of continuing to transport the goods to the destination exceeds the insured value. Constructive total loss shall be determined after verification by the insurer.

Partial loss

A loss that is not an actual total loss or a constructive total loss shall be a partial loss. The loss MAY be classified as GENERAL AVERAGE or particular AVERAGE ACCORDING TO the cause of the loss.

When a ship, goods or other property encounters a common danger in the course of maritime transport, the special sacrifices and expenses incurred as a direct result of the deliberate and reasonable measures taken to relieve the common danger are called general average. After the ship has been in general average, all sacrifices and expenses falling within general average may be allowed in general average by the parties concerned to the benefit of the salved (i.e., the ship, the CARGO and the freight income) in proportion TO the value of the salved, before a claim is made against their respective insurers. General average apportionment involves complex factors and is usually adjusted by special average Adjustment agencies.

A LOSS WHICH IS NOT OF A GENERAL AVERAGE NATURE AND WHICH DOES NOT REACH THE LEVEL OF A TOTAL LOSS IS CALLED A PARTICULAR AVERAGE. Such loss relates only to the sole loss of interest of the owner of the vessel or cargo.

According to the Cargo Insurance Regulations, the underwriters are entitled to cover all losses and general average due to Marine risks, regardless of the type of cargo risks covered. In the case of constructive total loss, the INSURED may choose to claim for total loss or partial loss as the goods were not completely lost. In case of total loss, the INSURED shall submit a NOTICE of Abandonment to the Underwriter. If the title to the residual subject matter is delivered to the insurer, the insurer may, upon acceptance, be compensated for the total loss.

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