Total Loss and Abandonment

In one line

A total loss is either actual, where the thing is gone, or constructive, where saving it would cost more than it is worth; and only the second requires the assured to give up what is left.

In the wording a student can write in an exam: by section 56 a loss is either total or partial, and a total loss is either actual or constructive; by section 57 there is an actual total loss where the subject matter is destroyed, or so damaged as to cease to be a thing of the kind insured, or where the assured is irretrievably deprived of it; by section 60 there is a constructive total loss where it is reasonably abandoned because an actual total loss appears unavoidable, or because it could not be preserved without an expenditure exceeding its value when incurred; and by sections 61 and 62 the assured must elect, and must give notice of abandonment if he elects to treat it as total.

The classification: section 56

Section 56(1) provides that a loss may be either total or partial, and that any loss other than a total loss is a partial loss.

Section 56(2) provides that a total loss may be either an actual total loss or a constructive total loss.

Section 56(3) provides that, unless a different intention appears from the terms of the policy, an insurance against total loss includes a constructive as well as an actual total loss.

Section 56(4) provides that where the assured brings a suit for a total loss and the evidence proves only a partial loss, he may, unless the policy otherwise provides, recover for a partial loss. He does not lose the case by claiming too much.

Section 56(5) provides that where goods reach their destination in specie, but by reason of obliteration of marks or otherwise they are incapable of identification, the loss, if any, is partial and not total.

That last sub section is a favourite examination point. A consignment of identical bags whose marks have washed off has arrived; the assured's difficulty is proving which bags are his, and that is a partial loss, not a total one.

Actual total loss: sections 57 to 59

Section 57(1) provides that there is an actual total loss where the subject matter insured is:

destroyed; or

so damaged as to cease to be a thing of the kind insured; or

where the assured is irretrievably deprived of it.

The second limb is the doctrine of loss of specie, and it is what makes cement that has set into a solid block, or hides that have rotted into a putrid mass, an actual total loss although the matter is still there.