It is referred to as the particular loss or damage which is caused to a cargo where the damages happen due to a particular peril and the loss is directly borne by the persons who are affected by the damages to the cargo. It means, in any situation, it is not possible to shift the burden of loss to other persons involved in the maritime.

In other words, the result of a particular average is such that the loss falls on the owner of the particular ship who has incurred damages either due to an accident or deliberately.

According to the Marine Insurance Act, 1906, the particular average is a partial loss (i.e., any other loss other than a total loss) which is caused due to an insured peril and which is not a general average loss.

It means, if some parts of cargo get damaged due to sea water during the voyage, the loss will be considered as particular and hence it will be borne by persons who directly get affected due to damage to the said cargo.

The particular average loss with regard to cargo may happen due to lower of the value of some factors during the voyage. Also, with regards to the ship (hull or machinery), the damages must be caused only to a part of the ship and there should not be the total loss of the ship.

How much amount will be paid by the insurance company in order to indemnify the policyholder for a particular average will depend on the amount of the insurance premium paid. Usually, the insurer is required to pay for the loss for which the premium has been paid by the policyholder. It is necessary to note that the amount that the insurance company has to pay is not required to depend on the market price, which the goods might fetch when they reach the port of destination or arrival.

Case:1

Until now, it was the smooth journey for Tango ship which was sailing from India to Sri Lanka. However, after two days of the sailing, the ship found itself caught in the bad weather and its propeller got damaged. To ensure the continuation of the voyage, ship required some repairing work as well.

Any expenditure on the repairing work was borne by the shipowner. In this case, as the shipowner had a marine cargo insurance, the insurer settled or indemnified the claim on the basis of the diminished value of the property sustained due to losses or damages. As losses or damages were due to an insured peril, which was a natural calamity, in this case, the insurance company considered it as a particular average and settled the claim accordingly.

Case: 2

The ship was carrying a cargo worth Rs 1 crore when suddenly, due to mechanical issues, it started overheating. The captain immediately informed the ship owner who tried to find out all the possible ways to safeguard the goods. Finally, the cargo owner decided to sell the cargo at a lower value in the intermediate port before the cargo reaches to the destination port. The goods were sold at Rs 5 lakh, however, if they would have been sold in the market, the cargo owner would have realised Rs 9 lakh.

In this case, the cargo owner had to incur losses due to selling goods urgently. The cargo-owner had a marine cargo insurance policy and he the insurer who considered it as a particular damage and decided to settle the claim. As the cargo-owner had to sell goods suddenly, they incurred losses which were considered by the insurer as the part of the particular average loss, and therefore, they were settled accordingly.