22Apr
“GENERAL AVERAGE” And The Importance of Marine Insurance

The cost of vehicle export can add up, so while cargo insurance may seem obvious, many exporters tend to overlook marine insurance and take risks they shouldn’t.  It is of course rare for a ship to sink, but when exporting vehicles, there are many other possible ways to lose the value of your exported car. 

The owners of the Ever Given, which became stranded in the Suez Canal on March 23, 2021, would certainly recommend shipping insurance. Based on the law of general average they are holding all shippers responsible for the expenses and losses as a result of the Suez Canal blockage event and will not release the containers until the shipper has paid its share 

When General Average is declared, every cargo owner is held liable to help pay for loss and damages in proportion to the value of the goods that are being shipped.  In the event of Suez Canal, this includes the expense incurred for freeing the ship. The higher the value of the car shipped overseas, the more contribution will need to be made even if your exported vehicle is not damaged. 

This leaves shippers with uninsured cargo highly vulnerable to losing it – and losing their business along with it. Their goods can be held under lien by the owner until the deposit is finally paid. Shippers with cargo and marine insurance, however, will simply have these deposits covered by their insurers and their goods – such as exported vehicles – will be returned to them much faster.  

Marine insurance seems pretty worth it when you consider it that way, does it not? 

In reality, General Average really means a “general loss”, and when shipping valuable vehicles overseas, your share will be quite substantial.  With a most basic policy, this event would be covered which is why we always recommend it.  With your cargo insured, the insurance company provides the guarantee and any contribution required for the loss.