Category: Marine · Reviewed by Al Jabbar, Broker · Specialist Risks · Last reviewed 2026-06-05
General average is the ancient maritime principle, codified in section 66 of the Marine Insurance Act 1906 and administered under the York-Antwerp Rules, that extraordinary sacrifices or expenditures voluntarily and reasonably made for the common safety of a maritime adventure must be shared proportionately by all interests benefiting from the act.
Category: Marine insurance Also known as: GA, general average act, general average sacrifice/expenditure First codified: Lex Rhodia de Iactu (c. 800 BC); Digest of Justinian (533 AD); Marine Insurance Act 1906, s.66 Related legislation: Marine Insurance Act 1906 [1]; York-Antwerp Rules [4]
General average (‘GA’) is one of the oldest principles in maritime law, dating back at least to the Lex Rhodia de Iactu of ancient Rhodes (c. 800 BC) and adopted into Roman law in the Digest of Justinian (533 AD). The principle is that where extraordinary sacrifices or expenditures are voluntarily and reasonably made for the common safety of a maritime adventure - to preserve the ship, cargo and freight from a peril threatening the whole - those losses must be shared by all interests benefiting from the act, in proportion to the values saved [1][3].
Section 66(2) of the Marine Insurance Act 1906 defines the general average act: ‘There is a general average act where any extraordinary sacrifice or expenditure is voluntarily and reasonably made or incurred in time of peril for the purpose of preserving the property imperilled in the common adventure.’ Section 66(1) defines the general average loss as ‘a loss caused by or directly consequential on a general average act’ [1].
The classical statement is in Birkley v Presgrave (1801) 3 East 220, where Lord Lawrence stated: ‘All loss which arises in consequence of extraordinary sacrifices made or expenses incurred for the preservation of the ship and cargo come within general average, and must be borne proportionally by all who are interested.’ This formulation is referenced in modern decisions and underlies the York-Antwerp Rules’ Rule A definition [1][5].
Classic examples of general average include: jettison of part of the cargo to lighten a vessel in distress and allow it to refloat; deliberate damage to a hold or vessel structure during firefighting to extinguish a fire that threatens the entire vessel; payment of salvage to a salvor who has rescued the entire adventure from a peril; engagement of tugs or stand-by services to escape a peril; entry into a port of refuge to enable necessary repairs; and reasonable expenses incurred at the port of refuge during repairs.
Section 66 of the MIA 1906 is the statutory foundation. The section establishes that the assured may recover a general average loss directly from the insurer where the loss is caused by a peril insured against and the assured has paid or is liable to pay a general average contribution to other interests. Sub-section (4) makes clear that this is so ‘subject to any express provision in the policy’ - and modern Institute Cargo Clauses (cl.2) specifically include cover for general average and salvage charges [1].
Sub-section (5) provides that the insurer is not liable for any general average loss or contribution where the loss was not incurred for the purpose of avoiding, or in connection with the avoidance of, a peril insured against. This ‘common safety’ requirement means that GA is only payable from insurers if the underlying peril was one covered by the policy - so for example a GA sacrifice made to escape a war peril is recoverable from a war policy but not from a standard cargo policy that excludes war risks.
The detailed mechanics of GA adjustment are governed by the York-Antwerp Rules, incorporated into the contract of carriage (the bill of lading or charterparty). The Rules consist of a Rule of Interpretation, lettered Rules A to G setting out the general principles, and numbered Rules I to XXIII addressing specific categories of GA sacrifice and expenditure. The current versions in active use are York-Antwerp Rules 1994 and 2016, with the older 1974 Rules still found in some contracts [4].
The Rules are not statutory but a private code adopted by international agreement through the Comité Maritime International (CMI) and supported by the International Union of Marine Insurance (IUMI). They are revised periodically by CMI conferences, with revisions in 1924, 1950, 1974, 1994, 2004 and 2016 [4][6].
Average adjusters - specialist independent professionals - prepare GA adjustments. The Association of Average Adjusters maintains professional standards and the Association represents adjusters internationally. Major adjustments may take years to complete, with substantial values held in bond pending finalisation.
When a general average act occurs, the shipowner formally declares general average and appoints an average adjuster. The adjuster’s role is to: identify the GA sacrifices and expenditures (the ‘allowances’); identify the contributory interests (the ‘contributory values’); apportion the loss between the interests in proportion to their saved values; and prepare a statement (the GA adjustment) showing each interest’s contribution [3][4].
Before cargo is released at destination, cargo owners typically face requests to provide GA security. This takes the form of a General Average Bond signed by the cargo owner (a contractual undertaking to pay the eventual GA contribution) and a General Average Guarantee issued by the cargo insurer or, occasionally, a cash deposit. Without such security, the shipowner exercises a lien on the cargo for GA contribution and will not release it. Cargo insurers under Institute Cargo Clauses cover are obliged to issue the GA guarantee on the assured’s behalf.
The GA adjustment is prepared over a period from months to years for complex cases. The adjuster collects evidence of values at the relevant time and place (typically values at the port of refuge or, for some versions of the Rules, at the time and place of the GA act), reviews the master’s logs and documentary evidence, allows or disallows specific items of expenditure, and ultimately apportions the contributions. The adjustment may be challenged by interests dissatisfied with specific allowances or values, with arbitration provisions in the GA bond.
Modern GA cases of note include the MSC Napoli (2007, a container vessel beached after a structural failure in the English Channel), the Maersk Honam (2018, a 15,000 TEU container vessel that suffered a serious fire while carrying cargo in the Arabian Sea, leading to a major GA), and the Ever Given (2021, the container vessel that grounded in the Suez Canal, leading to a GA declared by the shipowner). Each illustrated the scale and complexity of modern container ship GA, with thousands of cargo interests each requiring individual security and contribution.
The York-Antwerp Rules have been revised multiple times, and contracts of carriage specify which version applies. The 1974 Rules remain in some use; the 1994 Rules are widely used; the 2004 Rules were less popular and were withdrawn following market dissatisfaction (particularly regarding the treatment of salvage allowances); the 2016 Rules are the current CMI version. Differences between the versions affect allowances, particularly for port of refuge expenses, time and time-related costs, and treatment of salvage [4].
Container ship GA presents particular challenges given the very large number of cargo interests (often several thousand on a single vessel) and the difficulty of obtaining security from each. Specialist GA security solutions, including bulk security arrangements and electronic security tools, have developed in response.
Some carriers seek to limit GA exposure through contractual provisions, including the ‘New Jason Clause’ (allowing GA to be declared even where the loss arose from a peril for which the carrier has contractual immunity) and the ‘Both to Blame Collision Clause’ (apportioning loss in a collision between two vessels both at fault). These standard clauses are included in most modern bills of lading.
Salvage under LOF (Lloyd’s Open Form) typically operates in parallel with GA. A salvage award arbitrated by Lloyd’s Salvage Arbitration Branch is shared between interests in proportion to salved values, broadly mirroring GA contribution but as a separate process.
A container vessel carrying approximately 3,800 TEU suffers a serious fire in cargo holds while transiting open ocean. The crew brings the fire under control with assistance from naval vessels in the area, and the vessel diverts to a port of refuge for damage assessment. Approximately 600 containers are destroyed by fire and firefighting water; the vessel sustains significant structural damage. The shipowner declares general average and engages an average adjuster. Cargo owners worldwide are asked to provide GA bonds (signed by them) and GA guarantees (issued by their cargo insurers under ICC (A) cl.2). The contributory values are approximately $580m (vessel plus salved cargo plus freight); the GA allowances total approximately $42m (deliberate firefighting damage, port of refuge expenses, salvage charges). The GA percentage is therefore approximately 7.2% of contributory values. Each cargo owner’s contribution is paid by their cargo insurer where ICC cover is in place. The adjustment takes approximately 24 months to finalise and involves coordination between adjusters, insurers and cargo owners in multiple jurisdictions.
This entry is part of the Apex Insurance Wiki. Last reviewed by Matt Bartlett on 2026-06-05. Next review: 2026-12-05.
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