Clause 11: General Average and Salvage

11.1 This insurance covers the vessel's proportion of salvage, salvage charges and/or general average, reduced in respect of any under-insurance, but in case of general average sacrifice of the vessel the Assured may recover in respect of the whole loss without first enforcing their right of contribution from other parties.

11.2 Adjustment to be according to the law and practice obtaining at the place where the adventure ends, as if the contract of affreightment contained no special terms upon the subject; but where the contract of affreightment so provides the adjustment shall be according to the York-Antwerp Rules.

11.3 When the vessel sails in ballast, not under charter, the provisions of the YorkAntwerp Rules, 1974 (excluding Rules XX and XXI) shall be applicable, and the voyage for this purpose shall be deemed to continue from the port or place of departure until the arrival of the vessel at the first port or place thereafter other than a port or place of refuge or a port or place of call for bunkering only. If at any such intermediate port or place there is an abandonment of the adventure originally contemplated the voyage shall thereupon be deemed to be terminated.

11.4 No claim under this Clause 11 shall in any case be allowed where the loss was not incurred to avoid or in connection with the avoidance of a peril insured against.

Comments to ITCH

ITCH Cl. 11 must be read in connection with MIA section 66.

ITCH cover the vessel’s proportion of expenditure or sacrifice incurred in salvage or general average. However, compensation will be reduced in case of under insurance.

A general average act may damage the vessel and it might take time before the general average adjustment is drawn up and the assured can claim contribution from the other interests. ITCH gives the assured the right to claim the whole loss from the hull insurer without first enforcing the right of contribution from a third party in general average.

NMIP Comparison

In NMIP the relevant provisions on salvage and general average have been incorporated under clauses 4-7 to 4-12. Clause 4-7 states the general criteria for compensation of costs of measures to avert or minimize the loss, including salvage award and general average. The scope of the insurer’s liability for salvage and general average contributions appears from Cl. 4-8 to Cl. 4-11.

NMIP Cl. 4-8, sub-clause 1 provides cover for the vessel’s proportion of salvage and general average in full even if the contributory value (marked value) exceeds the agreed value. NMIP will also cover general average contributions apportioned on freight or charter-party hire, provided that the assured is also the owner of this interest.

In NMIP Cl. 4-10 the assured may claim the damage or loss in accordance with the rules relating to particular average if this results in a more favorable outcome for the assured.

Comments to ITCH Cl. 11.2

Under ITCH the contribution will be recoverable based on a lawful average adjustment, normally based on the York-Antwerp Rules.

NMIP Comparison

As under ITCH the contribution will, according to the NMIP Cl. 4-8, sub-clause 1, third sentence, be recoverable based on a lawful average adjustment, normally based on the York-Antwerp Rules.

Comments to ITCH Cl. 11.3

When an unchartered vessel sails in ballast, there is no common maritime adventure, and hereof no general average. ITCH will still cover loss in such situation as if there was general average as per the provisions of the York-Antwerp Rules. For example, the assured may be entitled to claim bunkers and wages and maintenance of crew during the prolongation of the voyage or stay at the port of refuge, despite the fact that there is no common adventure. Commission of 2 % on general average disbursements (rule XX) and interest of 7 % on expenditure, sacrifice and allowances in general average (rule XXI) are excluded.

NMIP Comparison

NMIP Cl. 4-11 refers to the York-Antwerp Rules. It is not explicitly stated that the vessel cannot be under charter, however in practice, the vessel would be taken off hire as soon as general average situation arises. Commission and interest as per the York-Antwerp Rules are excluded, still the assured will receive commission and interest as per the NMIP Cl. 4-3 and Cl. 5-4.

Comments to ITCH Cl. 11.4

ITCH states that the assured will be indemnified only if salvage or general average act was for the purpose of avoiding a loss caused by an insured peril.

NMIP Comparison

The fundamental requirement under NMIP Cl. 4-7 is that a casualty must have occurred or threatens to occur.


Comments to ITCH Cl. 11 and the application of deductible

General average and salvage claims are subject to deductible, as per ITCH Cl. 12.

NMIP Comparison

The cover for general average and salvage claims under NMIP is recoverable without the application of any deductible, cf. Cl. 12-18, sub-clause 3.