What is general average (GA) in shipping?
When a ship faces a common danger, such as a fire, grounding or engine failure, the master may sacrifice property or incur extraordinary costs to save the voyage, for example by jettisoning cargo, flooding holds to fight a fire, or hiring salvage and towage. The shipowner then declares general average, and an average adjuster calculates the loss and divides it among the ship, the cargo and the freight in proportion to their values.
General average is governed by the York-Antwerp Rules, which most bills of lading and charter parties incorporate; the edition that applies is the one named in the contract. It differs from particular average, a loss that falls only on the owner of the damaged goods. In general average, a shipper whose cargo arrived intact still pays a share, because the sacrifice also saved that cargo.
Before cargo is released, the carrier requires GA security from each cargo interest: usually a signed average bond plus an insurer's guarantee or, for uninsured cargo, a cash deposit that can be a substantial share of the cargo value. Insured owners pass the paperwork to their insurer; uninsured ones must fund the deposit themselves and may wait years for the final adjustment. That risk alone is a strong argument for insuring every shipment.