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Slide 1 · MARINE INSURANCE LOSSES & GENERAL AVERAGE
MARINE INSURANCE LOSSES & GENERAL AVERAGE
Practical Guide for Maritime Professionals
Actual Total Loss
Constructive Total Loss
Particular Average
General Average
Average Adjuster
Slide 2 · TYPES OF MARINE
TYPES OF MARINE
INSURANCE LOSSES
Marine Insurance Act 1906 (MIA 1906) categorises
losses into Total Loss and Partial Loss.
1
ACTUAL TOTAL LOSS
(ATL)
Property destroyed
Ceases to be the
insured subject-matter
Irretrievably deprived
EXAMPLES
CLAIM
Vessel sinks
Cargo destroyed
by fire
Full insured value
without abandonment.
MIA 1906 – Section 57
2
CONSTRUCTIVE TOTAL
LOSS (CTL)
Property not completely
destroyed, but recovery
and repair costs exceed
its value after repair,
or other Section 60
criteria are met.
EXAMPLES
REQUIREMENT
Severe grounding
Major engine room
flooding
Notice of
Abandonment
required.
MIA 1906 – Sections 60 & 62
3
PARTICULAR AVERAGE
(PA)
Partial damage
No common sacrifice
Ship or cargo owner
bears own loss
Recoverable
under policy
EXAMPLES
Collision damage
to the ship
Cargo damaged
by seawater
MIA 1906 – Section 64
4
GENERAL AVERAGE
(GA)
Voluntary sacrifice
made to save the
common maritime
adventure.
EXAMPLES
SHARED BY
Jettisoning cargo
Emergency towage
Port of refuge
expenses (where
allowable)
Ship
Cargo
Freight
MIA 1906 – Section 66 &
York-Antwerp Rules (contract edition)
Slide 3 · GENERAL AVERAGE
GENERAL AVERAGE
ADJUSTMENT PROCESS
The Average Adjuster ensures a fair and transparent
apportionment of General Average expenditure.
1
MARINE CASUALTY
Peril threatens the vessel,
cargo and freight.
2
MASTER DECLARES
GENERAL AVERAGE
Master declares GA and takes
necessary measures to save
the common adventure.
3
AVERAGE ADJUSTER
APPOINTED
Independent professional
expert is appointed.
4
COLLECT EVIDENCE
Deck Log & Engine Log
Weather Reports
Master's Statement
Survey Reports
Port & Authority Records
5
IDENTIFY ALLOWABLE
GA EXPENDITURE
Apply York-Antwerp Rules to
determine allowable items.
6
CALCULATE
CONTRIBUTORY VALUES
Ship (sound value at end
of voyage)
Cargo (net value at
destination)
Freight at risk
7
ISSUE GA BOND &
GA GUARANTEE
Obtain security from cargo
interests before cargo release.
8
PREPARE ADJUSTMENT
Total GA Expenditure
Total Contributory Values
GA Percentage
Contribution from each interest
9
FINAL CONTRIBUTION
COLLECTION
Collect contributions from all
interests as per adjustment.
10
ISSUE FINAL ADJUSTMENT
Basis for recovery from hull,
cargo and freight underwriters.
AVERAGE ADJUSTER
RESPONSIBILITIES
VERIFY GA ACT
Establich that a real and
imminent peril existed
and the sacrifices/
expenditures were
voluntary and reasonable.
APPLY YORK-
ANTWERP RULES
Identify and allow only
those items that are
permissible under the
applicable Rules.
CALCULATE
CONTRIBUTIONS
Determine contributory
values, GA percentage
and amount due from
each interest.
COORDINATE
SECURITIES
Work with P&I Clubs
and cargo insurers to
obtain GA Bonds and
GA Guarantees.
PREPARE FINAL
ADJUSTMENT
Issue a detailed and
transparent adjustment
for all parties.
SUPPORT DISPUTE
RESOLUTION
Provide expert evidence
in case of disputes,
arbitration or court
proceedings.
General Average adjustments are prepared
in accordance with the Marine Insurance
Act 1906 and the York-Antwerp Rules
(edition incorporated into the contract,
commonly 2016 or later in modern practice).
Slide 4 · QUICK COMPARISON & KEY TAKEAWAYS
QUICK COMPARISON & KEY TAKEAWAYS
Understanding the differences helps in correct claims handling and risk management.
QUICK COMPARISON
FEATURE | ACTUAL TOTAL LOSS (ATL) | CONSTRUCTIVE TOTAL LOSS (CTL) | PARTICULAR AVERAGE (PA) | GENERAL AVERAGE (GA)
Nature | Total loss – property completely destroyed. | Total loss in law – recovery/repair uneconomic as per Section 60. | Partial loss – individual damage by an insured peril. | Not a loss by peril – sacrifice or expenditure to save the common adventure.
Total Loss | Yes | Yes | No | No
Partial Loss | No | No | Yes | Yes
Notice of Abandonment | No | Yes (Required) | No | No
Shared by All Parties | No | No | No | Yes (Shared rateably)
Basis of Claim | Full insured value | Full insured value (if abandonment accepted) | Cost of repair or depreciation in value | General Average Contribution based on contributory values
MIA 1906 Reference | Section 57 | Sections 60 & 62 | Section 64 | Section 66 & York-Antwerp Rules (contract edition)
KEY TAKEAWAYS
ATL
Property is completely destroyed or irretrievably lost. Claim the full insured value.
CTL
Recovery or repair is uneconomic under Section 60. Notice of Abandonment is essential.
PARTICULAR AVERAGE
Partial damage to ship or cargo due to an insured peril. Each party bears their own loss.
GENERAL AVERAGE
Voluntary sacrifice or expenditure for the common safety. Shared proportionately by all interests.
AVERAGE ADJUSTER
Independent technical expert who prepares the General Average Adjustment in accordance with the law and York-Antwerp Rules.
SECURITY IS CRUCIAL
GA Bond & GA Guarantee from cargo insurers (or alternative security) are required before cargo release.
General Average adjustments are prepared in accordance with the Marine Insurance Act 1906 and the York-Antwerp Rules (edition incorporated into the contract, commonly 2016 or later in modern practice).
Drafted by SailR from our daily lessons. AI-drawn illustration. Simplified to explain the idea, not to scale. Last updated 19 Oct 2026.
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