Free of Particular Average

Free Of Particular Average

Summary of Free Of Particular Average

A clause in a basic marine cargo insurance policy restricting settlements in the case of partial losses attributable to perils of the sea or incidents where the vessel has been sunk, burned, or stranded during the course of the voyage. An F.P.A. policy provides the most limited coverage. The word free conveys that the insurance is free of the burden of settling partial loss. An FPA clause is written under one of two conditions: 1. FPA—English conditions, the more liberal and more common form, provides for settlement of partial losses when the vessel has been sunk, burned, or stranded at any time during the voyage.

2. FPA—American conditions responds for partial losses only when directly caused by sinking, burning, or stranding. This form of limitation is used primarily in relation to special risks, e.g., cargo transported by barge or sailing craft.

The terms English and American conditions refer only to the origins of the respective clauses; today, either cover would be written in both the London and American insurance markets.

(Main Author: William J. Miller)

Free of Particular Average in International Trade

Meaning of Free of Particular Average (fap), according to the Dictionary of International Trade (Global Negotiator): A type of marine cargo insurance providing minimal coverage. It corresponds to the Institute of London Underwriters “C” clauses. Free of particular average covers:

Total or partial loss from stranding, sinking, burning or collision.

Total loss from errors in vessel management, boiler bursting, defects in hull or machinery and explosion, This coverage is usually inadequate for shipments of goods of more than nominal value. Nevertheless, both the current versions of Incoterms and ICC's Uniform Customs and Practice for Documentary Credit (UCP 600) accept minimum-cover insurance as the seller's compliance with its obligation to insure in the absence of any agreement to the contrary. See London Institute of Underwriters Clauses.

Free of Particular Average (FPA) in International Trade

Meaning of Free of Particular Average (fpa), according to the Dictionary of International Trade (Global Negotiator): A type of marine cargo insurance providing minimum cover in the US market. London Institute of Underwriters “C” Clauses, offer virtually the same coverage in other markets. Free of particular average covers:

Total or partial loss from stranding, sinking, burning or collision.

Total loss from errors in vessel management, boiler bursting, defects in hull or machinery and explosion.

This coverage is usually inadequate for shipments of goods of more than nominal value. Nevertheless, Incoterms rules accept minimum-cover insurance in the absence of any agreement to the contrary. Therefore, the seller and the buyer should carefully define the coverage that they want, and should clearly agree that the responsible party provide it. FPA is the opposite of all risks and London Institute of Underwriters “A” Clauses, which provide maximum cover, especially when augmented to include war, strike, riot and civil commotion perils.


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