Constructive total loss
Not destroyed, but not worth saving.
Definition
Section 60 of the Marine Insurance Act 1906: the goods are reasonably abandoned because actual total loss appears unavoidable, or because saving them would cost more than they would be worth when saved. Claiming a constructive total loss requires a notice of abandonment to the insurer; without it the claim can only be treated as a partial loss.
Why it decides money
Cargo that is recoverable in theory and worthless in practice — soaked paper, contaminated food, corroded castings — is the standard case, and the notice is the procedural step most often missed.
Related terms
- Actual total loss
- The goods are destroyed, gone, or no longer the thing they were.
- Particular average
- A partial loss borne by one interest alone.
- Salvage charges
- What salvors are owed for saving property at sea, recoverable under the cover.
More in claims and recovery
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