Free of particular average
From Supply Chain Management Encyclopedia
Russian: Свободно от частной аварии
Free of particular average (FPA) means a marine insurance term meaning that the assurer will not allow payment for partial loss or damage to cargo shipments except in certain circumstances, such as stranding, sinking, collision or fire.. (See Table 1. below)
A FPA policy covers total losses , but covers only partial losses in some circumstances. The major issue is whether the policy is a Free of Particular Average—English Conditions policy or a Free of Particular Average—American Conditions policy. Under an American Conditions policy, partial losses are covered only if they result directly from a fire, a stranding, a sinking, or a collision. Under an English Conditions policy, the partial losses are covered if they occur on the same voyage that a fire, a stranding, a sinking, or a collision occurs, without these perils having directly caused the loss .
Table 1. Marine Insurance Coverage Summary
|Perils Covered Against||Coverage A of the Institute Marine Cargo Clauses||Coverage B of the Institute Marine Cargo Clauses||Coverage C of the Institute Marine Cargo Clauses||All Risks Coverage||With Average (Typical Coverage)||Free of Particular Average (Typical Coverage)|
|Improper Stowage by Carrier||YES||YES|
|Damage While Loading/Unloading||YES||YES||YES||YES|
|Damage on land Before Loading||YES||YES||YES||YES||YES||YES|
- ↑ Glossary of Shipping Terms, Maritime Administration, Washington, DC, 2008 - www.marad.dot.gov/documents/Glossary_final.pdf
- ↑ There are two different types of Total Loss defined in the Marine Insurance 1906 Act (http://www.legislation.gov.uk/ukpga/Edw7/6/41/contents).
- 1) Actual Total Loss is where " ... the subject matter insured is destroyed, or so damaged as to cease to be a thing of the kind insured, or where the assured is irretrievably deprived thereof."
- 2) Constructive Total Loss is where " ... the subject matter insured... could not be preserved from actual total loss without an expenditure which would exceed its value when the expenditure had been incurred". Hull policies covering war risks usually have a clause allowing the insured to claim a CTL if he has been deprived of use of the ship for a period of 12 months. ..
- ↑ David, P., Stewart, R. International Logistics: The Management of International Trade Operations - Thomson: Mason, Ohio. 2007 Ch.10-8f - http://www.atomicdogpublishing.com/MyBackpack/ContentDisplay3-0/main.asp?book=pd-376-3-182426&Session=068AAB9A-AE8A-432A-8EE6-22D9AC5259C0 - accessed 11/26/2012
- ↑ 4.0 4.1 4.2 4.3 Under an FPA policy, any partial loss incurred would not be covered unless it is due to a ship sinking, burning, becoming stranded, or being involved in a collision; a total loss would be covered