Mataracy
VIP Contributor
The Marine insurance Act defines Constructive Total Loss in the following terms.
" There is a constructive total loss where the subject matter insured is reasonably abandoned on account of its actual total loss appearing to be unavoidable or because it could not be preserved from actual total loss without an expenditure which would exceed its value when the expenditure had been incurred.
Indeed under constructive total loss the subject matter insured is not destroy, it is not in fact totally lost but commercially a total loss has incurred. Suppose a vessel has grounded. In order to save her, it may be necessary tovtake out her cargo, pump out the water and raise her. When raised, she may be so great that a prudent insured owner might as well come to conclusion that it is not worthwhile to save her at such a cost. These operations would involve a financial loss unless the value of the vessel so recovered and repaired exceed the cost of the operations; and the insured is entitled to decline to incur such a loss and may call upon the insurers tobpay him for constructive total loss.
Where there is a constructive total loss, the assured may either treat the loss as if it were an actual total loss. Even if the ship is a is a constructive total loss, the assured may elect to repair her, and hr may receive the cost of repairs up to 100 percent of the valuation , and retain the ship.
" There is a constructive total loss where the subject matter insured is reasonably abandoned on account of its actual total loss appearing to be unavoidable or because it could not be preserved from actual total loss without an expenditure which would exceed its value when the expenditure had been incurred.
Indeed under constructive total loss the subject matter insured is not destroy, it is not in fact totally lost but commercially a total loss has incurred. Suppose a vessel has grounded. In order to save her, it may be necessary tovtake out her cargo, pump out the water and raise her. When raised, she may be so great that a prudent insured owner might as well come to conclusion that it is not worthwhile to save her at such a cost. These operations would involve a financial loss unless the value of the vessel so recovered and repaired exceed the cost of the operations; and the insured is entitled to decline to incur such a loss and may call upon the insurers tobpay him for constructive total loss.
Where there is a constructive total loss, the assured may either treat the loss as if it were an actual total loss. Even if the ship is a is a constructive total loss, the assured may elect to repair her, and hr may receive the cost of repairs up to 100 percent of the valuation , and retain the ship.
