When the subject-matter is partially damaged, it will be a case of partial loss. It is of two types: 1. Particular Average Loss and 2. General Average Loss.
1. Particular Average Loss
A particular average loss has been defined as, “a partial loss of subject-matter insured, caused by a peril insured against, and which is not general average loss.” A particular average loss is not caused voluntarily. The insured subject-matter should be damaged and this damage should be caused by marine peril which is insured.
2. General Average Loss
A general average loss is caused voluntarily to avoid an impending danger. “A general average loss is one which is caused by an extra-ordinary sacrifice or expenditure voluntarily and reasonably made or incurred under fortuitous circumstances, for the sole purpose of preserving the common interest from an impeding peril.
If a ship is sinking because of overload, some of the cargo may be thrown out of the ship with a purpose to save the ship and the crew. It will be a case of general average loss. Some conditions are to be satisfied before deciding about a general average loss:
- There must be an extra-ordinary situation.
- The peril must be real and not imaginary.
- The loss must be voluntary and deliberate.
- The sacrifice must be mad prudently.
- The purpose should be to save the whole adventure.
- The act should be successful at least partially.