Valuation by Services :
The valuation by services removes the defects of memorandum clause which is used to free certain commodities from particular average and in the case of other commodities the damage has to amount to at least 5 per cent to become recoverable. Specifically, the provisions are:
1. Corn, fish, salt, fruit, flour and seed, etc., is warranted free from particular average unless the ship is stranded.
2. Sugar, tobacco, hemp, flax, hides and skins, etc., are warranted free from particular average unless the ship is stranded or unless amounting to 5%.
3. All the other goods are warranted free from particular average unless the ship be stranded or unless amounting to 3%.
The stranding of the ship vitiates the Memorandum and renders insurers liable for any particular average which has occurred on the voyage irrespective of the franchises mentioned.
Percentage has to be taken into consideration in ascertaining whether the franchise is reached, but when attained the damage is paid in full.
If the particular average reaches the stated percentage, the insurer becomes liable in respect of the whole loss and not merely for the excess over the franchise or exemption limit.
As has been mentioned above, the particular average loss can be claimed only when it exceeds ‘certain fixed percentage’ of the total value of the goods. But this limit or percentage may account a huge amount when a very large amount has been insured.
In such a case, it will work as a great hardship to the assured as he will have to suffer this partial loss himself. In order to lessen the rigors’ of memorandum clause, the subject-matter is divided in sections known as ‘series’ and the franchise i.e., the exemption limit will be considered for each series separately for the purpose of calculating particular average loss.
The subject-matter may vary according to the type of interest, packing, original localities. The last series which does not fulfill the required limit or amount is called tail series. A tail series is dealt as a complete series. The assured is free to recover particular average in respect of each series separately.
Particular Average on Ship :
In case of partial loss of ship the following factors are considered:
1. Where the ship has been repaired, the assured is entitled to the reasonable cost of the repairs less the customary deductions. The amount of repair shall not be more than the sum insured.
2. Where the ship has been only partially repaired; the assured is entitled to the reasonable cost of such repairs, reasonable depreciation.
3. If the ship has not been repaired and has not been sold in her damaged state during the risk, the assured is entitled to be indemnified for the reasonable, depreciation arising form, the unrepaired damage.
The measure of indemnity for particular average is the reasonable cost of repairing the damage less the customary deductions ‘new for old’. If the damaged parts of the ship are old then the insurers is obliged to indemnify the insured only to the extent of the value of the old parts.
But whiffed parts are added, the difference between the value of the new parts and the value of the old parts are made.
Insurers are liable for the cost of repairing particular average damage to the ship irrespective of the insured or actual value of the ship where temporary repairs are necessary the insurers are liable for such repairs in addition to the permanent repairs.
Where a ship cannot be repaired at the port of refuge, cost of removal to another port is regarded as part of the cost of repairs. Extra expenses involved in ‘over-time’ working are not allowed.
Particular Average in Case of Freight :
Where there is a partial loss of freight, the measure of indemnity is such proportion of the sum fixed by the policy in the case of a valued policy, or of the insurable value in the case of an unvalued policy as the proportion of freight lost by the assured bears to the whole freight at the risk of assured under the policy.