The Ever Given – Declaration of General Average – What Are The Implications?

The Ever Given was stuck in the Suez canal for six days and its owner declared a general average on 01.04.2021, but what does this mean for those with containers on board?

The owner of the Ever Given declared a general average following the work to re-float the ship in the Suez Canal in March 2021. It is understood that the Egyptian authorities could seek more than $1 billion in damages and the declaration of a general average by the ship’s owner, means that shippers will be required to share the relevant expenses incurred in ship rescue. Whilst lost revenue for the canal wouldn’t fall under general average, the costs involved in freeing the ship are likely to result in this being one of the largest general average cases that has ever arisen in terms of the number of different property interests.

The general average terms are outlined in a shipment’s bill of lading and can cover a long list of expenses, including towing and salvors. When importing and exporting goods, it is essential to ensure that adequate marine cargo insurance cover is in place to cover such general average liabilities. Where insurance cover is operational, then (subject to policy terms and conditions) the insurers will pay the general average security or guarantee to release their cargo, well before the general average claim adjustment process is complete.

The last significant container vessel to declare general average was in 2018, following the fire aboard the Maersk Honam. Whilst the fire happened in March 2018, shippers were able to pay to release their cargo by May 2018. According to an MSC press release at the time, owners of the cargo aboard the Honam had to pay 54% of the cargo’s value to get it released (42.5% of the cargo value for the security, plus 11.5% as deposit on the general average).

It may be a surprise to hear that not all cargo owners buy marine cargo insurance, despite this being a relatively cheap insurance to arrange. Where no marine cargo insurance is in place, a cash deposit is needed before the goods can be released. Adjusters typically include a margin of safety when determining a guarantee deposit, however differences are then refunded.

For further marine cargo insurance tips and advice, visit our Frequently Asked Questions section now, or if you would like a no-commitment quote to cover your imports, exports and/or domestic transits, simply complete our quote enquiry form below:

Marine Cargo & Transit Insurance Quote Request

If you’re not sure what your requirements are, we will gladly discuss with you to ensure that your financial interests are best protected. Please Call us on 01384 442 165 (Mon-Fri, 9am-5pm), or Email: marine@insurance2day.co.uk. We can provide same day quotes for most shipments.