Constructive Total Loss in United Kingdom

Definition of Constructive Total Loss

In accordance with the work A Dictionary of Law, this is a description of Constructive Total Loss : A loss of a ship or cargo that is only partial but is treated for the purposes of a marine insurance policy as if it were an *actual total loss. This may occur when an actual total loss either appears unavoidable (e.g. when a perishable cargo becomes stranded indefinitely) or can only be prevented by incurring expenditure greater than the value of the ship or cargo. In estimating the cost of repairs for this purpose, general average contributions by other insurers are left out of account, but the expense of salvage operations is a relevant factor. The insured must serve a notice of *abandonment of the ship or cargo on the underwriters. This must be unconditional and served within a reasonable time of his learning of the loss; once accepted by the underwriters, it is irrevocable. The underwriters become liable to indemnify him as for a total loss and in return are entitled to all his rights in the ship or cargo.