Free of particular average
From Supply Chain Management Encyclopedia
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'''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.<ref> Glossary of Shipping Terms, Maritime Administration, Washington, DC, 2008 - www.marad.dot.gov/documents/Glossary_final.pdf </ref>. (See Table 1. below) | '''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.<ref> Glossary of Shipping Terms, Maritime Administration, Washington, DC, 2008 - www.marad.dot.gov/documents/Glossary_final.pdf </ref>. (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 <ref> 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</ref>. | + | A FPA policy covers ''total losses'' <ref> There are two different types of Total Loss defined in the 1906 Act. |
+ | * 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. .. | ||
+ | Marine Insurance and Reinsurance / 1988 General Insurance Convention, p.13 - http://www.google.ru/url?sa=t&rct=j&q=pdf%20%22total%20losses%22%20marine&source=web&cd=4&sqi=2&ved=0CEoQFjAD&url=http%3A%2F%2Fwww.actuaries.org.uk%2Fsystem%2Ffiles%2Fdocuments%2Fpdf%2Fmarine.pdf&ei=sMneUL3TJ8qL4ATq4oGIAw&usg=AFQjCNGr1SAHhL6a5T2ABV2L0bjIQWV0mA&bvm=bv.1355534169,d.bGE&cad=rjt - accessed 11/26/2012 </ref>, 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 <ref> 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</ref>. | ||
==Table 1. Marine Insurance Coverage Summary== | ==Table 1. Marine Insurance Coverage Summary== |
Revision as of 15:05, 29 December 2012
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.[1]. (See Table 1. below)
A FPA policy covers total losses [2], 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 [3].
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) |
Fire | YES | YES | YES | YES | YES | YES |
Explosion | YES | YES | YES | YES | YES | YES |
Stranding | YES | YES | YES | YES | YES | YES |
Sinking | YES | YES | YES | YES | YES | YES |
Collision | YES | YES | YES | YES | YES | YES |
General Average | YES | YES | YES | YES | YES | YES |
Jettison | YES | YES | YES | YES | YES | [4] |
Loss Overboard | YES | YES | YES | YES | [4] | |
Seawater Damage | YES | YES | YES | YES | [4] | |
Lightening | YES | YES | YES | YES | [4] | |
Condensation | YES | YES | ||||
Improper Stowage by Carrier | YES | YES | ||||
Theft | YES | YES | ||||
Pilferage | YES | YES | ||||
Leakage | YES | YES | ||||
Breakage | YES | YES | ||||
Damage While Loading/Unloading | YES | YES | YES | YES | ||
Damage on land Before Loading | YES | YES | YES | YES | YES | YES |
See also Particular average insurance, Marine insurance
References
- ↑ 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 1906 Act.
- 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