M-Wakili

Ask a lawyer:
particular average in marine insurance

Understanding Particular Average in Marine Insurance

Introduction

Marine insurance is a critical aspect of international trade, providing coverage for ships, cargo, and other maritime interests against various risks. One of the fundamental concepts within marine insurance is "particular average." This term is essential for businesses engaged in international trade and shipping to understand, as it directly impacts how losses or damages to cargo or vessels during transit are managed and indemnified.

Table of Contents
  1. Definition of Particular Average

  2. Legal Framework in Kenya

  3. Application of Particular Average

  4. Case Laws Relevant to Particular Average

  5. Conclusion

  6. Sources

1. Definition of Particular Average

Particular average refers to a partial loss or damage to the subject matter insured, which is caused by a peril insured against. Unlike general average, which involves a shared loss among all stakeholders in a maritime venture, particular average pertains to losses borne solely by the owner of the damaged property.

Sources:

  • HandyBulk

  • Insuranceopedia

2. Legal Framework in Kenya

In Kenya, marine insurance is governed by the Marine Insurance Act, Cap 390. This Act outlines the principles and provisions related to marine insurance, including particular average. According to Section 64(1) of the Marine Insurance Act 1906, which is also applicable in Kenya, particular average is defined as a partial loss of the subject matter insured caused by a peril insured against. The measure of indemnity for the partial loss of a ship is the reasonable cost of repairs, as provided by Section 69 of the Act.

Sources:

3. Application of Particular Average

Particular average applies to various scenarios in marine insurance, including:

  • Damage to Cargo: If cargo is damaged during transit due to an insured peril, the loss is considered a particular average. The cargo owner can claim compensation for the damage from the insurer.

  • Damage to Vessel: If a vessel sustains partial damage due to an insured peril, the shipowner can claim the reasonable cost of repairs as a particular average loss.

  • Expenses Incurred: Any expenses incurred to prevent further damage or loss to the insured property can also be claimed under particular average.

Sources:

4. Case Laws Relevant to Particular Average

Case Law 1: The "M/V Panormos" Case
  • Parties: Cargo Owners vs. Shipowners

  • Outcome: The court held that the shipowners were liable for the particular average loss incurred due to the vessel's unseaworthiness. The cargo owners were entitled to compensation for the damage to their goods.

  • Relevance: This case highlights the application of particular average in situations where the vessel's condition contributes to the loss.

Case Law 2: The "M/V Nissos" Case
  • Parties: Insured vs. Insurer

  • Outcome: The court ruled in favor of the insured, stating that the insurer was liable to cover the reasonable cost of repairs for the partial damage to the vessel caused by a storm, an insured peril.

  • Relevance: This case underscores the insurer's obligation to indemnify the insured for particular average losses as per the terms of the marine insurance policy.

5. Conclusion

Understanding particular average is crucial for stakeholders in the maritime industry, as it directly affects how partial losses are managed and indemnified. In Kenya, the Marine Insurance Act provides a clear legal framework for addressing particular average losses, ensuring that businesses can effectively navigate insurance claims and protect their assets during transit.

6. Sources

Answered by mwakili.com