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General average explained: what cargo owners must do when it is declared

When a ship's owner declares general average after a fire, grounding or engine failure, every cargo owner on board must pay a share of the costs of saving the voyage, even if their own goods are undamaged. The cargo is released only against security: an average bond plus an insurer's guarantee, or a cash deposit for uninsured goods. Cargo insurance usually pays the contribution.

Checked against official sources: 2026-10

At a glance

What it isAn extraordinary sacrifice or expenditure intentionally and reasonably made for the common safety of ship and cargo
RulesUsually the York-Antwerp Rules (YAR), latest version adopted by the CMI in 2016
Who paysShip and all cargo interests, in proportion to their values at the end of the voyage
ExamplesJettisoning cargo (sacrifice) or paying for tug assistance (expenditure)
Insured cargoAverage bond signed by the cargo owner plus an average guarantee signed by the insurer
Uninsured cargoA cash deposit, set by the average adjuster as a percentage of the cargo's value
Average adjusterCollects security and calculates the shares impartially; this can take many months
InsuranceInstitute Cargo Clauses (A), (B) and (C) all cover general average and salvage charges

What general average is

Rule A of the York-Antwerp Rules 2016 says there is a general average act when, and only when, any extraordinary sacrifice or expenditure is intentionally and reasonably made or incurred for the common safety, for the purpose of preserving from peril the property involved in a common maritime adventure. Under the Rule Paramount, nothing is allowed unless reasonably made or incurred.

Hapag-Lloyd's general average FAQ explains the two types: a sacrifice, such as jettisoning cargo, and an expenditure, such as paying for tug assistance. The costs are shared by all interests in proportion to their values; Rule G of the York-Antwerp Rules adjusts losses and contributions on the values at the time and place where the voyage ends. The carriage contract or bill of lading states which version of the rules applies.

What cargo owners must provide to get their goods

The shipowner can hold the cargo until each cargo interest gives security for its share. The average adjuster, an independent expert who acts impartially, collects it. According to Hapag-Lloyd's FAQ, cargo interests provide:

Why cargo insurance matters

Institute Cargo Clauses (A), (B) and (C) all cover general average and salvage charges, so the insurer issues the guarantee and pays the final contribution. Without insurance, the owner must put up cash before getting the goods and wait for the adjustment, which may take many months. Under CIF and CIP the seller arranges insurance for the buyer; under other Incoterms rules the party that carries the risk should decide whether to insure.

Step by step

  1. When general average is declared, contact your cargo insurer at once and give them the bill of lading and commercial invoice.
  2. Ask the average adjuster appointed by the shipowner for the security forms: the average bond and the guarantee form.
  3. Sign the average bond as the cargo owner or receiver and have your insurer sign the average guarantee.
  4. If the cargo is uninsured, prepare the cash deposit the adjuster asks for.
  5. Send the commercial invoice and value details, then collect the cargo once the carrier confirms security is in place.
  6. Keep all papers: the final adjustment can take many months, and a deposit may be partly refunded.

Documents you usually need

Common problems and how to avoid them

The cargo is undamaged but the carrier will not release it.

What to do: In general average every cargo interest must give security; provide the average bond and the insurer's guarantee or a cash deposit.

The cargo was shipped without insurance.

What to do: The adjuster will ask for a cash deposit based on the cargo's value; arrange it to release the goods, and insure future shipments.

The buyer and seller disagree on who must give security.

What to do: It depends on who owns the cargo and carries the risk under the sales contract and Incoterms rule; the cargo interest at destination usually provides it.

The deposit seems large compared with the damage.

What to do: It is an estimate of the cargo's share of all general average costs; the final adjustment may refund part of it.

Sources

  1. York-Antwerp Rules 2016 Comité Maritime International (published by the Government of Norway)
  2. General average: frequently asked questions Hapag-Lloyd
  3. CMI Guidelines relating to General Average (2nd edition, October 2022) Comité Maritime International
  4. Institute Clauses and Joint Cargo Clauses Marsh

Rules change often. This note is practical guidance based on the sources above, not legal advice. Confirm current requirements with the authority, your importer or a licensed customs broker before you ship.

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Trade notes

Cargo Insurance: Institute Cargo Clauses A, B and C Compared, 110% Cover and CIF vs CIPWhat Institute Cargo Clauses (A), (B) and (C) 2009 cover and exclude, warehouse-to-warehouse duration, the 110% insured value, what CIF and CIP…Carrier liability limits for lost cargo: Hague-Visby, COGSA, Montreal, CMRHow much a carrier pays for lost or damaged cargo: Hague-Visby 666.67 SDR per package or 2 SDR per kg, US COGSA USD 500 per package, Montreal 26…Bill of Lading Draft Check: SI, VGM, UCP 600, US ISF and EU ICS2Check a B/L draft before issue: parties, ports, goods, marks, weights, freight terms, on-board date, UCP 600 credit rules, US manifest and ISF, EU…

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Common questions

What does general average mean?

A sacrifice or expenditure made intentionally and reasonably to save ship and cargo from a common danger, shared by all interests in proportion to their values.

Do I have to pay if my cargo is not damaged?

Yes. General average is shared by all cargo interests on the voyage, whether or not their own goods were damaged.

What is an average bond?

A form signed by the cargo owner or receiver committing to pay its share of general average, given with the insurer's guarantee or a cash deposit to release the cargo.

Does cargo insurance cover general average?

Yes, Institute Cargo Clauses (A), (B) and (C) all cover general average and salvage charges.

Which rules apply?

Usually the York-Antwerp Rules; the CMI adopted the latest version in 2016, and the bill of lading or charter party states which version applies.

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