§ 1968 Free From Particular Average

This law says that if a marine insurance policy says it won't cover a specific loss (called particular average), the insurer doesn't have to pay for that loss even if the cargo becomes worthless, but the insurer still has to pay its share of any shared loss (general average) that the cargo suffers.

Key Takeaways

•If the policy says no particular average coverage, the insurer can refuse to pay for that specific loss, even if the cargo is totally worthless.
•The insurer must still pay its share of any general average loss that is assessed on the insured cargo.
•The rule only applies when the insured still has possession of the rest of the cargo at the destination port.

Example

A ship is carrying a load of smartphones. The insurance contract says it does not cover particular average loss. During the trip, a leak damages half of the phones, making them worthless, but the ship arrives at the destination with the rest of the phones still on board.

Because the policy excludes particular average, the insurer does not pay for the damaged phones, even though they are now worthless. If the crew later had to throw some cargo overboard to keep the ship afloat (a general average event), the insurer would have to pay its proportion of that loss.

Where it has been agreed that an insurance upon a particular subject matter, or class of subject matter, is to be free from particular average, a marine insurer is not liable for any particular average loss not depriving the insured of the possession, at the port of destination of the whole of such subject matter or class, even though the subject matter or class becomes entirely worthless; but such insurer is liable for his proportion of all general average loss assessed upon the subject matter insured. (Enacted by Stats. 1935, Ch. 145.)

Key Takeaways

•If the policy says no particular average coverage, the insurer can refuse to pay for that specific loss, even if the cargo is totally worthless.
•The insurer must still pay its share of any general average loss that is assessed on the insured cargo.
•The rule only applies when the insured still has possession of the rest of the cargo at the destination port.

Key Takeaways

Example

Key Terms

References

§ 1968 Free From Particular Average

Key Takeaways

Example

Key Terms

References

Key Takeaways

Example

Key Terms

Related Statutes

References

Key Takeaways

Example

Key Terms

Related Statutes

References