Free of particular average (FPA),
Definition of Free of particular average (FPA):
Marine insurance provision which limits the liability of an insurance company to only those losses that exceed a specified percentage of the value of the goods. It is similar to the deductible clause included in other types of insurance, but is not applicable where a cover for total loss is in force. FPA conditions are applied where the goods are extremely susceptible to damage, or are rendered almost worthless from exposure to water or heat. However, its usage differs in the UK (where it applies to partial loss caused directly or indirectly by mishaps such as burning, collision, sinking, or stranding of the ship) from its usage in the US (where it applies only to loss caused directly by such mishaps). FPA conditions have now largely been replaced by the world-wide standard Institute Cargo Clause C. See also with particular average.
In shipping parlance, the word “average” is associated with losses, and “general average” refers to a loss associated with cargo or the ship itself. The expense of protecting the ship and its cargo is typically shared between the shipowner, the cargo owner, and other interested parties on a pro-rata basis.
Free of Particular Average (FPA) is an insurance contract clause that eliminates an insurer’s liability for partial losses. FPA clauses are most commonly found in marine insurance policies.
How to use Free of particular average (FPA) in a sentence?
- There are two common FPAs conditions used—English and American.
- The FPA clause takes away an insurer's liability for partial losses.
- Typically FPA is used in marine insurance policies, often regarding cargo.
Meaning of Free of particular average (FPA) & Free of particular average (FPA) Definition