Benefits of General Average insurance

General Average cover has been available for a number of years, and is well established under the Nordic Plan and other conditions. The benefits of coverage beyond the standard limits make the product as relevant as ever.

A General Average situation will in some cases trigger the Owners to utilize the GA absorption clause under the Hull & Machinery policy.

However, should the incident be of a certain size and complexity, which incurs costs beyond the GA absorption clause, Owners will need to declare General Average, resulting in a time consuming and expensive process of collecting General Average security and bonds from cargo insurers and cargo receivers.

In addition to the cost and time elements, it is important to keep in mind that a full GA declarations will trigger the risk of severely damaging the relationship to the customers, such as charterers and cargo receivers.

A General Average Insurance solution with a tailored additional insurance cover, featuring a higher limit of coverage, will allow Owners to refrain from declaring a full GA and thus avoiding the complications this entails, even if the total costs are substantial and exceeding the normal GA absorption clause amount.

The benefit of a Special GA Cover is as such to avoid uneven disputes with the customers, but rather strengthen the commercial relationships.

With the current state of shipping markets, the benefits of protecting key commercial relationships should not be underestimated. Similarly, one could imagine that an Owner with the added benefit of relieving their clients of GA concerns could be a more attractive prospect for new business than their competitors. These benefits may also go beyond the container segment, where this kind of insurance historically has been most popular.

Norwegian Hull Club has the capability to tailor make General Average Insurance solutions based on the underlying Hull & Machinery conditions and the Owners fleet profile.

For questions or specific requests, please contact our Special Risk's division:

21. Aug. 2015