What are the types of losses?

Answer

Losses types-

1.Total Loss- 

a. Actual Total Loss
b. Constructive Total Loss 

2. Partial Loss-

a. Particular Average
b. General Average

A Total Loss occurs when the subject matter insured is completely destroyed, damaged beyond recovery, or lost to the owner.

Actual Total Loss (ATL): An Actual Total Loss occurs when:

• The subject matter insured is completely destroyed.

• The subject matter is so severely damaged that it ceases to be a thing of the kind insured.

• The assured is irretrievably deprived of the subject matter.

Constructive Total Loss (CTL)

A Constructive Total Loss occurs when the subject matter insured is not completely destroyed, but its actual total loss appears unavoidable, or it cannot be saved without an expenditure that exceeds its value once repaired/recovered.

Any loss that is not a Total Loss is legally classified as a Partial Loss.

Particular Average Loss (PAL):

 A fortuitous, accidental partial loss or damage directly caused by an insured peril (e.g., heavy weather damage to hull plating, accidental grounding damage, or accidental cargo wetting).The loss is borne solely by the owner of the specific property damaged (or their individual H&M/Cargo insurer). It does not involve other parties in the voyage.

General Average Loss (GAL): 

An extraordinary sacrifice or expenditure intentionally and reasonably made/incurred in a time of common peril for the purpose of preserving the property imperiled in the common maritime adventure (governed by the York-Antwerp Rules). The loss/expense is shared proportionately by all financial interests benefiting from the act (Shipowner, Cargo Owners, and Freight Interest).