Florida 2-20 General Lines Agent (Property, Casualty, Commercial Lines and Florida Law)Commercial LinesHard
A cargo ship carrying a diverse range of goods from Miami to Brazil encounters a severe storm. To prevent the ship from capsizing, the captain orders some non-essential cargo to be jettisoned (thrown overboard). Upon arrival, the owners of the jettisoned cargo seek compensation. Under Ocean Marine insurance, how would the financial responsibility for this intentionally sacrificed cargo typically be handled?
- AThe shipowner's Protection and Indemnity (P&I) policy would cover the loss entirely.
- BThe shipowner's Hull policy would cover the jettisoned cargo, as it was an action taken to save the vessel.
- CThe individual cargo owners whose goods were jettisoned would bear the loss themselves.
- DThe loss would be shared proportionally by all parties involved in the voyage (shipowner and all cargo owners) through General Average.
Show answer & explanationAnswer & explanation
Correct answer: D. The loss would be shared proportionally by all parties involved in the voyage (shipowner and all cargo owners) through General Average.
This scenario describes General Average. When a voluntary sacrifice (like jettisoning cargo) is made to save the entire maritime venture from a common peril, the resulting loss is shared proportionally by all parties whose interests were at risk (the shipowner and all cargo owners, not just those whose cargo was sacrificed).
Why the other options are wrong
- A. P&I covers third-party liabilities, not a shared loss from a voluntary sacrifice to save the ship and remaining cargo.
- B. The Hull policy covers physical damage to the ship itself, not cargo, even if the action was to save the vessel.
- C. This contradicts the principle of General Average, where the sacrifice benefits all, so the loss is shared by all.
General Average (Ocean Marine)
A principle in maritime law where all parties in a sea venture (ship and cargo owners) proportionally share losses resulting from a voluntary sacrifice made to save the whole from an impending common peril.
- Requires a common peril and a voluntary sacrifice.
- Loss is shared by all parties at risk.
- Applies to ship and all cargo, regardless of whose cargo was sacrificed.
Memory trick: General Average: All Aboard, All Share.