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Understanding Free of Particular Average, American Conditions in Maritime Law
Definition & Meaning
The term "Free of Particular Average, American Conditions" (FPAAC) refers to a specific clause in marine insurance policies. This clause restricts coverage for partial losses to those that result directly from certain perils, including fire, stranding, sinking, or collision. Essentially, if a loss occurs due to any other cause, the insurance policy will not provide compensation. FPAAC is considered one of the most limited average clauses currently in use, making it crucial for policyholders to understand its implications.
Table of content
Legal Use & context
The FPAAC clause is primarily used in marine insurance contracts. It is relevant in legal contexts involving shipping, cargo, and marine liability. Understanding this clause is essential for shipowners, cargo owners, and insurers, as it directly affects the extent of coverage provided under marine insurance policies. Users can manage their insurance needs by utilizing legal templates from US Legal Forms, which can help in drafting or reviewing marine insurance agreements.
Key legal elements
Real-world examples
Here are a couple of examples of abatement:
Example 1: A cargo ship catches fire while at sea, resulting in partial loss of the cargo. Under the FPAAC clause, the insurer would cover the loss since it was caused by fire.
Example 2: A shipment is damaged due to rough weather, but this is not one of the specified perils. In this case, the insurer would not provide compensation as per the FPAAC clause. (hypothetical example)
Comparison with related terms
Term
Definition
Key Differences
Free of Particular Average
Covers only specified perils for partial losses.
Most limited coverage; excludes many causes of loss.
With Average
Covers all partial losses, regardless of cause.
Provides broader coverage than FPAAC.
Common misunderstandings
What to do if this term applies to you
If you are considering a marine insurance policy that includes the FPAAC clause, it is important to review the terms carefully. Ensure you understand what is covered and what is not. If you find yourself facing a loss that may be affected by this clause, consider consulting with a legal professional to understand your options. Additionally, you can explore US Legal Forms for templates that can assist in managing your insurance documentation.
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