Introduction
Arnould defined particular average as a loss arising from damage accidentally and proximately caused by the perils insured against, to some particular interest, as the ship alone or the cargo alone.' The Marine Insurance Act, 1906 defines Particular Average as a partial loss (any loss other than a total loss) caused by a peril insured against, and which is not a general average loss. Particular average, instead of being contributed for by the general body of those who are interested in the adventure, falls entirely upon the particular owner of the property, which has suffered by the damage. Such owner has a claim against the insurer in proportion to : 1. Degree by which the damage sustained may have diminished the value that the property has to him, and To the sum that the insurer has agreed to insure. In order to illustrate this situation better, let us consider an example. Suppose the goods have been insured for a sum of Rs. 5000. If sold in the market they would have realised for the owner Rs. 15,000. But due to the occurrence of a particular average loss, they can only be sold for a sum of Rs.12,000. Therefore, the loss in value is Rs.3,000, which is 1/5 of the value o the objects that would have been realised if there was no loss. The insurer is bound to pay to the assured, in such a case, the same proportion of the sum insured, as the damage may have been deducted from the value they would have realised, but for the loss. Therefore, in this case, the insurer is liable for a sum of Rs.1000. The damage which has brought about a claim against the insurer has to be proximately caused by the perils insured against and it must not have arisen either from the ordinary wear and tear of the voyage, or from the inherent vice and defect of the object insured or of the willful misconduct of the assured.
Research Methodology
The aim of this project is to examine the concept of particular average, which is an important part of the law relating to the claims made in the field of marine insurance. In this regard an attempt has been to define and thereby understand the basic concept and thereafter examine related aspects to the concept of particular average, and also the calculation of the same in various situations. The various issues examined in this project are as follows: Adjustment of particular average on goods The nature of the markets at the port of arrival Extent of depreciation
Adjustment on a Total loss of Part Adjustment of Particular Average on Ship Extra Cost of Repairs at port of Distress Costs to be included in the Repairs Successive Losses Recovery of partial loss of Freight
This project suffers from quite a few limitations. The principle being the fact that the focus of this project being on English law and very little emphasis has been placed on Indian law. The main reason for this has been the fact that the material on the topic in Indian law is very hard to come by, despite the best and diligent efforts of the student. The scope of the topic was also very narrow and the law on the subject has been stagnant for a long time and therefore, the scope for analysis and originality has been rather restricted. The chapterisation is rather non-existent, in the sense that the project has only one chapter and this chapter has sub-headings that have discussed various issues related to the topic. A descriptive style of writing has been used, with analysis wherever possible and probable.A uniform style of foot-noting has been followed.
Extent Of Depreciation
The extent of depreciation in value ascertained by simply comparing the price for which the goods would have sold in the market had they arrived there sound with the price for which they actually do sell arriving there damaged. The difference between the market price of the sound and market price of the damaged goods gives the direct amount of the merchant's loss. But, this is not the liability of the insurer, as it would make the market price at the destination port, the basis of the insurer's liability, when the extent of their liability is actually the prime cost of the goods at the port of loading. Also it would make the insurer dependant on the fluctuation of the market, with which he is not concerned in the least bit, as in for the same amount of damage, he has to pay more when the goods come when the prices are rising and less when the prices are falling. The desired object is to ensure that some uniform value or a standard of value is obtained, so that the liability in respect of a particular loss on damaged goods, shall be always the same when the proportional extent of damage is the same. The object is not to ascertain the direct amount of the merchant's loss, but it's relative amount, i.e., the proportion, which it bears to the price at which the goods would have sold, if sound. The question is whether the commodity is or or 1/8 the worse for the damage. When this is ascertained, the liability of the underwriter is ascertained also, for he pays the same proportional part of the value of the prime cost in the policy. Therefore, the sum which the insurer has to pay is dependant on the relative extent of the loss and will be the same whether the gods arrive at a rising or a falling market.
The insurer has to pay the percentage of the prime cost of the value in the policy, which has to be ascertained by comparing the gross produce of the sound sales with the gross produce of the damaged sales. This is the best way to calculate the measure of depreciation, as involving the net proceeds in the calculation would subject the insurer to the fluctuations of the market. Another consequence of taking the net proceeds would be that the insurer would be made liable for a loss not arising from the deterioration of the commodity, but from having to pay equal freight duties and charges on commodities of unequal value, i.e. on both the sound and damaged goods.
amount insured, and accordingly that the insurers were bound to pay that proportion of the loss which 12,000 bore to the whole value of goods at risk on board all the barges at the time of loss, and not that the proportion which 12,000 might bear to the whole amount carried during the year.
against. Even if the insurers refuse to consent to the repairs being done in a particular way, the assured may proceed with such repairs and the insurers will be liable, if the repairs are necessary and done properly. What happens in case the repairs are deferred and not undertaken immediately, and as a result they cost more than if immediate action was taken? The answer is that the insurer will not be liable to recover increased costs due to the delay in repairing, either on the ground that the indemnity falls to be measured at the termination of the risk.
Successive Losses
If the ship has actually been repaired in a port of distress, and is afterwards totally lost before arriving at the port of destination, the cost of such repairs may be recovered cumulatively in addition to the total loss, either as per average, or as money laid out and expended in labouring for the safeguard and recovery of the ship in the manner prescribed in the policy. When no such repairs have been made, no previous partial loss by sea-damage can be recovered from the insurer, as a particular average, in addition to a subsequent total loss; the less is there swallowed up by the larger, till they are both one loss. If the subsequent loss occurs during or be proximately caused by perils operating during the currency of the policy, but not be due to a peril therein insured against, the insurer pays nothing. But if the average loss unrepaired have occurred during the currency of one policy, and the subsequent total loss occurs as a result of perils opening during the pendency of another policy and after the expiration of the first policy, the assured is entitled to recover from both policies, i.e. for both the average and particular losses, if they are due to perils insured against.
sum insured is of the insurable value of the freight, if the sum insured equals the insurable value of the interest, then he pays the whole of the loss. Freight is generally insured in valued policies, and when this is so the valuation of the policy is the sole basis on which to calculate the amount of the indemnity the insurer has to pay. Where, however, only part of the full cargo to which the valuation is to apply is on board, the insurer can only be called onto pay such proportion of the amount insured as part of the cargo on board, or contracted for at the time of loss, bears to the full intended cargo. If an unvalued policy is on freight, only part of the cargo on board or contracted for at the time of loss, and this is totally lost, the insurers can only be called upon to pay the actual amount of the freight on the goods actually lost, together with the premiums and costs of insurance. The insurers whether in a valued or unvalued policy, should adjust as for a total loss of part of the freight, paying the same proportion of the sums for which they have subscribed the policy as the freight of the goods lost bears to the full freight, which would have been earned, had the whole intended cargo been loaded and all arrived.
Conclusion
The method of ascertaining the amount, which the insurer has to pay in order to indemnify the assured for a particular average loss on goods arriving damaged, based upon the amount of premium paid by the assured to the insurer. Basically, the insurer has to pay for the loss for which he has received premium. The basis for the adjustment of the particular average loss on goods fully insured, is either the prime cost or the value expressed in the policy. The valuation of the policy is only conclusive of the value of the interest to which it was intended to apply; the assured cannot recover on the basis of the full valuation, where only part of the cargo to which it was to apply was on board at the time of the loss. The amount that the insurer has to pay doesn't depend on the higher or lower market price, which the goods might fetch at their port of destination or arrival. This is so because the market price at the port of destination is a very different thing from their prime cost on board at the port of loading or from their value in the policy. The insurer does not undertake to put the assured the merchant in the same position he would have been had his goods arrived safely in the port of destination, but to solely put him, in regard to such goods in the situation in which he was at the beginning of the risk. When the goods arrive, two points have to be ascertained, 1) the extent in depreciation in value which the goods have suffered, and 2) the amount which the insurer has to pay the assured. The extent of depreciation in value ascertained by simply comparing the price for which the goods would have sold in the market had they arrived there sound with the price for which they actually do sell arriving there damaged. When an integral pat of the goods is totally lost, the underwriters will have to pay the same proportion of the insurable or agreed value, which the goods bear to the whole goods of the same description covered by the insurance; in other words, the exact amount lost must be paid for at its loss, whether insurable or agreed. When such total loss of part and also damage to the remainder occur at the same interest, the
practice is to adjust them separately, but this is not absolutely necessary, as, whether they are resolved together or separated the result is the same. In the case of a distress sale, the insurer pays the difference between the prime cost, or insured value of the goods, and the net proceeds of the damaged sales, i.e., their market price after deducing all expenses, including freight, where any is due. a different method of adjustment is to be used is the case of damaged goods and a damaged ship, because even if the goods are damaged the goods are up for sale and will command a price, whereas in the case of a damaged ship, the ship needs to be reconditioned, and this is generally done by the assured and not by the purchaser. A ship is not usually up for sale because of damages and it is usually assumed that the necessary repairs will be performed by the owner. If the ship has actually been repaired in a port of distress, and is afterwards totally lost before arriving at the port of destination, the cost of such repairs may be recovered cumulatively in addition to the total loss, either as per average, or as money laid out and expended in labouring for the safeguard and recovery of the ship in the manner prescribed in the policy.
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