OUR SERVICE - Insurance Services

» Institute Cargo Clauses (all risks)

The with average (w.a.) is sometimes called the with particular average. In insurance parlance, the word "particular" means partial, and the word "average" means loss. As such, the words "with average" and "with particular average" mean including partial loss. The with average (w.a.) is a less inclusive form of coverage than the all risks. It covers against total loss and partial loss caused by the perils of the sea (i.e., the vessel has been stranded, sunk, burnt or been in a collision with other vessels or external substances other than water, such as ice), jettison of cargo, barratry (i.e. Negligence, fraud or wrongful acts of the ship's master and/or crew resulting in injury or loss to the ship's owner), and other like perils. The partial loss, however, is subject to a franchise being written into the policy. The percentage of franchise can be 3% (or other percentage as specified) of the value of the shipment as agreed between the insurer and the assured. If the loss is less than the indicated franchise of 3% (or other percentage as specified) the assured cannot claim the loss. However, if the loss is equal to or more than the indicated franchise, the assured can claim the loss in full amount without any deduction from the insurer. Instead of a franchise the insurer and the assured may agree on an excess (deductible). The percentage of excess can be 3-10%. If the loss is equal to or less than the indicated excess, the assured bears the loss, that is, cannot claim the loss. However, if the loss is more than the indicated excess, the assured can claim the loss minus the deduction of the percentage of excess specified. In other words, the assured will always shoulder a percentage of the loss regardless of the amount of the loss.