Understanding Cargo Insurance and General Average
When shipping goods internationally, it’s easy to assume that once the cargo leaves port, it is safely on its way. While the focus is often on getting these items to their destination, it’s crucial not to overlook the potential risks involved. Your cargo carries more than just physical items — it carries your mission. Unfortunately, the journey between donor and destination is full of risk. One of the most critical protections your nonprofit can invest in is cargo insurance — especially because of a little-known maritime principle called General Average.
What is General Average?
General average is a legal principle in maritime law that dates back centuries. It states that when a voluntary sacrifice is made to save a common maritime venture from peril, all parties involved in the venture must share the resulting losses proportionally. This can easily become a 6 or 7 digit liability per party (think Baltimore bridge). Here’s what you need to know:
★ Collective Loss Sharing: If a portion of the cargo is jettisoned (thrown overboard) or damage occurs to the ship’s engine to save the vessel, all cargo owners, including nonprofit organizations, may be required to contribute to the general average claim
★ Unexpected Costs: General average can result in substantial and unexpected costs that are separate from cargo damage or loss
★ Legal Implications: General average is a complex legal matter that often involves extensive documentation and financial processes
Why Cargo Insurance Is Essential for Nonprofits
As stewards of donor resources and mission-driven operations, nonprofits must plan for the unexpected. Cargo insurance offers:
★ Coverage for loss or damage to your goods during transit (due to weather, theft, accidents, etc.)
★ Protection against General Average claims and costly delays at port
★ Peace of mind knowing your mission won’t be derailed by maritime risks
Your mission deserves protection
In recent years we have seen a large increase in the number of general average situations. By taking proactive steps to understand and address the risks of cargo loss and general average, your organization can safeguard your valuable shipments and ensure the continuation of your important work. Here is a video link for more information:
As always, Missionary Expediters is here to help you navigate through the ever-changing logistics world. We offer different coverage options to help meet your needs and budget constraints. Please reach out to your project lead or call for more information.
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