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A constructive total loss is a situation where the cost of repairs plus the cost of salvage equal or exceed the value of the property , therefore insured property has been abondoned because its actual total loss appears to be unavoidable or because as mentioned above could not be preserved or repaired without an expenditure which would exceed it's value.The term used in marine insurance in particular in the marine hull insurance.
Examples of constructive total loss as hereunder :-
1) In the case of damage to a ship , where she is so damaged by a peril insured against , that the cost of repairing the damage would exceed the value of the ship when repaired.
2) In the case of damage to the goods , where the cost of repairing the damage and forwarding the goods to their destination would exceed their value on arrival.
Thanking You.
