Legal Definition and Related Resources of Constructive Total Loss

In marine insurance , where through the perils insured against, the vessel has become of so little value that a prudent owner , uninsured, would decline any further expense in putting the vessel in a state of repair to pursue her voyage ; and if the expense of repairing her, so as to pursue her voyage, be greater than the value of the vessel when repaired, he is justified in declining to incur that expense, and he is allowed to abandon her and to treat the loss as total. Even though a vessel may be construed to be a total loss , the right of the insurer to recoup what it might from sale or other disposition of abandoned vessel is preserved. See Lenfest v Coldwell, (C.A.N. Y.) 525 S.2d 717.

Browse or run a search for Constructive Total Loss in the American Encyclopedia of Law, the Asian Encyclopedia of Law, the European Encyclopedia of Law, the UK Encyclopedia of Law or the Latin American and Spanish Encyclopedia of Law.

Constructive Total Loss in Historical Law

You might be interested in the historical meaning of this term. Browse or search for Constructive Total Loss in Historical Law in the Encyclopedia of Law.

Search for legal acronyms and/or abbreviations containing Constructive Total Loss in the Legal Abbreviations and Acronyms Dictionary.

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English Legal System: Constructive Total Loss

In the context of the English law, A Dictionary of Law provides the following legal concept 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.

Constructive Total Loss in Maritime Law

Note: There is more information on maritime/admiralty law here.

The following is a definition of Constructive Total Loss, produced by Tetley, in the context of admiralty law: [Translation of Constructive Total Loss in French: “perte réputée totale” or “perte totale et implicite”] [Translation of Constructive Total Loss in Spanish: “pérdida reputada total”] [Translation of Constructive Total Loss in Italian: “perdita totale da abbandono”] [Translation of Constructive Total Loss in German: “Fingierter Totalschaden”] – A constructive total loss occurs when:

1) the insured property 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;

2) where the insured is deprived of the possession of the insured property by a peril insured against and it is either unlikely that he can recover it or too costly to attempt to do so; or

3) where repairing the damage to the insured property would be too costly.

See Marine Insurance Act, 1906 (U.K.) sect. 60. See Tetley, Int’l. M. & A. L., 2003 at pp. 607-609.

Constructive Total Loss in Admiralty Law

For information on constructive total loss in this context, see the entry on constructive total loss in the maritime law encyclopedia.