AVERAGE. When there is partial loss and the insured cannot or does not elect to abandon and receive the entire indemnity, it beeomes necessary to ascertain the amount for which the insurer is liable. Such partial losses are known by the name of average, a term borrowed by marine insurance from general maritime law. It is frequently necessary to sacrifice some part of the ship or cargo in order to save the rest. It is obviously unjust to have the entire burden of loss tunde• such circumstances fall upon the party whose property is thus voluntarily destroyed or injured. Alaritime law• therefore prescribes the way in which such losses shall he apportioned or 'averaged' among all the interests at stake. The term average was later extendad to inelude losses of all kinds. To distinguish those losses which are of such a nature that they ought to he apportioned among all the parties from those which ought to be borne entirely by the party whose property is damaged. the former kind of loss is called general average, the latter particu lar average. In the case of the ship, the volun tary cutting away of a mast to save the ship would be general average; the loss of a mast through the violence of the wind would be par ticular average. There is general average on the cargo when a part of it is jettisoned. or thrown overboard to lighten the ship; there is particular average when a part of it is damaged as the result of the action of forces which are included in the policy. So far as the insuranee is con cerned, it is the general rule that the insurer is liable for all general averages under all con ditions. in the absence of fraud. his liability for particular average, however, is usually lim ited in the policy. For eertain kinds of com modities the policy exempts the insurer from all liability; for others, from liability for losses of less than 5 per cent., or sonw other specified proportion, unless the ship be stranded, while for all other commodities, and for ship and freight, liability does not attach unless the loss exceed 3 per rent. or the ship be stranded. W hen sev eral sneer—dye losses are experienced during the -ante voyage. the stun of all the losses is the amount considered in determining whether the percentage of loss is high enough to render the underwriters liable.
The measure of the liability of the insurer for particular average on the ship is the cost of repairs, including all extra expenses which they involve, with a deduction, usually of one•third, from the value of new material used in repairing the ship; in the case of freight it is the amount actually lost through the diminution in the weight of the cargo; :.ind for the cargo it is that
part of the invoice value of the damaged goods whieh remains after there has been subtracted from their total value such a proportion of the total value as the gross value of the damaged goods at the 'tort of destination is of the gross Value of similar goods in a sound condition.
OENtat.o. F.12.11.1% In tile ah•+•uc•c of insurance general average would be apportioned among all the owners of ship. cargo. and fright. Each party. including the one whose property was sacrificed. would make contribution in propor tion to the value of the property he had at stake. In estimating that value the Value of ship and cargo is usually taken at their actual value when they leach their destination, while the value of the freight is aseertained by subtracting the wage: of captaht and crew from the gross amount reeeived as freight. the Ilifferent parties are insured. general average is paid by the underwriters and not by the owners of the property. So far as general average is eon vented. insurance is a transfer from owners to underwriters of liability for contributions to re imburse those whose property has been sacrificed for the general gatod.
'Sur. axe Luton: When loss or disaster threatens a ship or cargo. the ma-ter of the vessel is bound to do everything in his power to avoid the danger or avert the loss. Whatever expense is incurred for that purpose the under writers are responsible fm-, under the so-called '.Wing and lahoring' clause. Mild] reads as fol lows: "In case of any loss or misfortune, it shall he lawful to the assured, their factors, servants and to sue, labor. and travel for. in. or about the defense, nod revovery of the said goods and merchandise, or ship. or any part thereof, without prejudice to this in'urance: to the charges whereof. we. the assur trs. will contribute. each one according to the rate and quantity of the S11111 111.11'111 insured." While the clause says that the insured 'may' sue :Ind labor. it is the established rule of law that he is bound so to net. The general rule is that in case of damage or partial loss the insured i- bound to act as a prudent man would net under the eiremnstanees if he were unin sured