Owner of ‘Ever Given’ declares General Average – Marine insurance matters!

As the investigation into the grounding of the Ever Given in the Suez Canal began last week, the vessel’s Japanese owner, Shoei Kisen, has declared General Average.

The grounding of the Ever Given is shaping up as potentially the most complex ‘general average’ (GA) claim of all time, with litigation potentially involving 20,000 teu and up to 20 cargo interests per container.

Lloyd’s List has reported that Egypt is looking to claim around $1bn in compensation for the casualty that closed the Suez Canal for six days last month, according to the head of the Suez Canal Authority. The money relates to lost income from transit fees, damage to the canal during the dredging and salvage efforts, and equipment and labour costs.

General Average is a legal principle of maritime law and requires that all cargo owners on a vessel to contribute to the costs of any loss, even if their cargo is not damaged. The last time General Average was declared was following the 2018 fire on board the Maersk Honam. After declaring GA, the insurance claim adjustor fixed the salvage security at 42.5% of cargo value and 11.5% as a GA deposit – this meant a shipper with a cargo worth $100,000 needed to pay a combined deposit of $54,000 to get its cargo released.

This leaves shippers with uninsured cargo highly vulnerable to losing it, as the owner can hold the goods under lien until the deposit is paid. Shippers with insured goods will have those deposits covered by their insurers.

The website forwardersmatter.com noted that insured customers will receive their cargo first, while uninsured shippers need the full costs to obtain release. It said that in this instance, “that cost is likely to be large and complex to work out. The costs include claims from other parties which will delay claims adjustors assessing the level of costs incurred. Those with insurance in place will simply provide an insurance certificate. Those without insurance need the final figures to pay their deposit. Difficult to provide a time-frame – could be weeks or months.” 

This incident is a perfect example of why marine insurance is very important! AvantiFM can arrange marine insurance with ease when handling your cargo.

To find out more about how we can help with your marine insurance go HERE.

Information and images sourced from: Lloyd’s Loading List and The Load Star