General Average, Salvage, Collision Liability and Third-Party Claims
This domain tests general average, salvage, collision liability and third-party claims, where marine insurance interacts with maritime law. Expect questions on York-Antwerp Rules, average bonds, LOF salvage, running-down clauses and apportionment.
Core rules
- General average is a voluntary sacrifice or extraordinary expenditure for the common safety of ship and cargo. Contributory values and the York-Antwerp Rules govern adjustment; cargo interests give an average bond or guarantee.
- Salvage is a reward for saving property at sea, often under Lloyd's Open Form on 'no cure, no pay' terms. Article 13 and Article 14, and SCOPIC, allocate reward and expenses.
- Sue and labour is the assured's own effort to avert an insured loss; it is distinct from GA and salvage.
- Collision liability is covered by a running-down clause. Common Institute hull wording covers three-fourths of collision liability; the balance may be separately insured or retained. The clause usually excludes certain liabilities and applies after apportionment.
Worked example
Vessel A is 60% to blame for a collision; Vessel B's damage is ₹1 crore. A's liability is ₹60 lakh. Under a 3/4 collision clause, A's hull insurer pays ₹45 lakh, and A bears ₹15 lakh unless it has additional cover. A's own hull damage is claimed under its H&M policy, subject to deductible; the insurer may pursue subrogation against B for B's share, subject to the wording.
Traps
Do not treat salvage as general average. Do not ignore the average bond. Do not apply 4/4 when the clause is 3/4. Do not calculate collision liability before apportionment. Do not allow double recovery for the same damage.