Section 64 of the Act defines Particular Average loss as ‘a partial loss’ of the subject-matter insured caused by a peril insured and is not a general average loss. The general average loss or expense is voluntarily done for the common safety of all the parties insured.
But, the particular average loss is fortuitous or accidental. It cannot be partially shifted to others but will be borne by the persons directly affected. The particular average loss must fulfill the following conditions:
1. Particular Average Loss is a partial loss or damage to any particular interest caused to that interest only by a peril insured against.
2. The loss should be accidental and not intentional.
3. The loss should be of the particular subject-matter only.
4. It should be the loss of a part of the subject-matter or damage thereto or both. The distinguishing feature in this matter is that where the properties insured are all of the same description, kind and quality and they are valued as a whole in the policy.
The total loss of a part of this whole is a particular loss, but where the properties insured are not all of the same description, kind and quality and they are separately valued in the policy, the loss of an apportion able part of the interest is a total loss.
In case of total loss of a part of recoverable either as a total loss or as a particular average loss, the basis of settlement will be on the total loss of the whole lot and the insurer will be liable to pay in proportion according to the insured or insurable value of the whole interest.
Particular Average on Cargo:
The particular average loss may be either the damage or depreciation of a particular interest or a total loss of its part.
If the property is insured under one value for the whole and is all the same kind, quality or description, a total loss of part will be recovered as a particular average loss.
In case where goods are delivered in a damaged condition or where the value is depreciated, the resulting particular average loss will be adjusted upon the basis of comparison between the gross sound value and damaged value. The process of valuation is as follows:
1. The gross sound value of the goods damaged is found out. This is the value for which the goods would have been sold if the goods had reached the port of destination in sound condition.
2. After calculating the above value, the gross damaged value of the goods damaged or depreciated is found out on the basis of market price at that time.
3. Deduct the gross damaged value from the gross sound value. The difference is the measure of the actual damage or depreciation.
4. The ratio of the damage or depreciation is calculated by dividing the amount of damage or depreciation by the gross sound value.
5. Apply the above ratio to the value (insured or insurable value as the case may be) of the damaged or depreciated goods which will give the amount of particular average loss.
6. of the amount thus arrived at the insurer is liable for that proportion which his sum insured bears to the value (insured or insurable).