General Average & The Importance of Having Cargo Insurance

  • General Average Declared for Cargo Ship Ever Given
  • What General Average Means for Shippers
  • The Importance of Having Cargo Insurance

Loaded cargo ship near port shipping cranes

Cargo Insurance: Why it’s Important, and Why Some Shippers Must Pay a Huge Bill to Refloat the Ever Given


Cargo insurance coverage is critical to protect your business from unforeseen dangers inherent in overseas cargo shipping.

In this blog, we highlight how important it is that you know what type of ocean cargo insurance you need and why.

Shoei Kisen Kaisha, LTD, owner of the cargo vessel Ever Given declared General Average last week.

Shippers must now share in the costs related to the ship’s rescue. 

Of course, a shippers’ insurance policy typically covers these charges.

But those who did not opt for cargo insurance coverage are now on the hook.

This means that Ever Given’s uninsured cargo owners need to pay a cash deposit for the vessel’s associated rescue costs before they can recover their goods.

Just as the investigation into the grounding of the Ever Given in the Suez Canal begins, shippers with cargo onboard receive some unexpected (and expensive) news – General Average has been declared.

“General Average means the financial responsibility for the ship itself falls on every cargo owner with goods on that ship.”

What Does General Average Mean for Shippers?

The law of General Average is a principle of maritime law whereby all stakeholders in a sea venture proportionally share any losses resulting from a voluntary sacrifice of part of the ship or cargo to save the whole in an emergency.

Today, when ocean carriers declare a General Average they shift the responsibility for cargo loss or damage over to the shippers.

Consequently, the financial responsibility for the ship itself falls on every cargo owner with goods on that ship.

In Ever Given’s situation, the vessel required 11 tugs and two dredgers in a rescue operation that lasted six days.

In addition, the good news is that there is no reported damage to the cargo onboard the vessel.

However, the rescue costs and the potential compensation claims to shipping companies and the Suez Canal Authority will no doubt mean a large bill for shippers.

Why Cargo Insurance Matters

The last time a major container ship declared a General Average followed the 2018 fire on board the Maersk Honam.

In this scenario, the adjustor fixed the salvage security at 42.5% of cargo value and 11.5% as a General Average deposit.

As a result, a shipper with a cargo worth $100,000 onboard had to pay a deposit of $54,000 in order to get its shipment released.

Consequently, the potential financial hardship brought on by the General Average makes it clear that having the right commercial ocean cargo insurance plan isn’t just smart- it’s essential.

Protect The Value of Your Cargo

BGI offers a free risk assessment of your current cargo insurance plan.

We start with a comprehensive check for any gaps in your coverage.

This will help you understand what your policy covers and what it doesn’t so you can find the best solution for your business.

We answer your questions and identify any issues to minimize potential disruptions in your supply chain.

Our goal is to make sure you are covered from warehouse to warehouse in order to give you the confidence in knowing that your cargo is safe, secure, and free from any liability.

To find out more about other ways we can help, check out the broad range of international freight services and 3PL logistics services on our website.

Based in Signal Hill, California, we work with clients globally.

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Having the right insurance plan isn’t just smart- it’s essential.