Total loss

Total loss is the marine-insurance category in which the insured ship or cargo is treated as wholly lost, splitting into actual and constructive total loss under the Marine Insurance Act 1906. Actual total loss (Section 57) is where the subject matter is destroyed, so damaged it ceases to be the thing insured, or the assured is irretrievably deprived of it. Constructive total loss (Section 60) is where the ship is reasonably abandoned because actual total loss looks unavoidable, or because saving or repairing it would cost more than its repaired value. On a constructive total loss the assured may serve a notice of abandonment and claim as for a total loss, passing the wreck and salvage proceeds to the insurer.