What is Average?

An early meaning (c.1500) of the word average is 'damage sustained at sea'. The root is found in Arabic as awar, in Italian as avaria and in French as avarie. Hence an average adjuster is a person who assesses an insurable loss. Marine damage is either particular average, which is borne only by the owner of the damaged property, or general average, where the owner can claim a proportional contribution from all the parties to the marine venture. The type of calculations used in adjusting general average gave rise to the use of 'average' to mean 'arithmetic mean'.

The basic idea of general average (the more important form) pertains to property that is voluntarily sacrificed to preserve the remainder of the property from destruction (as by throwing cargo overboard or cutting away masts to preserve the ship in a storm); the owners of the property saved must contribute to the owners of the property sacrificed in such an amount that all will have contributed proportionately to the aggregate value of the lost property.

Such a custom of contribution was firmly established in Roman law by the 6th century AD. What is now called the law of general average thus has an ancient lineage, and the doctrine has been admitted by all seafaring nations as part of their maritime laws. Repeated attempts to draft international conventions in the field of general average, however, have met with failure.