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Slide 1 · MARINE INSURANCE
MARINE INSURANCE
CONSTRUCTIVE
TOTAL LOSS
&
GENERAL AVERAGE
ADJUSTER
Key concepts every seafarer must know
FROM LOSS
TO SETTLEMENT
KNOW THE RULES
Same Sea
Higher Knowledge
Slide 2 · 1/4
MARINE INSURANCE
CONSTRUCTIVE
TOTAL LOSS
When a total loss is treated as total without
actual destruction
A Constructive Total Loss (CTL) exists where the subject
matter insured is not actually destroyed, but is so situated
that an actual total loss is unavoidable, or the cost of
preserving or recovering it would exceed its value once
that expenditure is incurred.
SITUATIONS WHERE CTL MAY EXIST
1
Deprivation of possession
The assured is deprived of the ship or goods by a peril
insured against, and either:
• it is unlikely they can recover it, or
• the cost of recovery would exceed the value
when recovered.
2
Damage to a ship
The ship is so damaged that the cost of repair exceeds
the value of the ship when repaired.
3
Damage to goods
The cost of repairing and forwarding the goods
to destination would exceed their value on arrival.
KEY REFERENCE
Marine Insurance Act 1906
Section 60
Slide 3 · 2/4
MARINE INSURANCE
WHAT HAPPENS
AFTER CTL?
The assured has a choice
OPTION 1
Treat it as a
Partial Loss
The assured retains
the subject matter and
claims the recoverable
partial loss.
OPTION 2
Abandon the
Subject Matter
The assured gives
notice of abandonment
and claims as for an
actual total loss.
IMPORTANT EXAM POINT
Notice of abandonment must generally be given with
reasonable diligence after reliable information of the loss.
If notice is not properly given, the loss is generally
recoverable only as a partial loss, subject to the statutory
exceptions (e.g. no benefit to insurer or insurer waives notice).
CTL VS ACTUAL TOTAL LOSS
CONSTRUCTIVE
TOTAL LOSS (CTL)
Assured has a choice
(partial loss or abandon)
Notice of abandonment
required for ATL claim
ACTUAL TOTAL LOSS (ATL)
Subject matter is destroyed,
ceases to be a thing of the
kind insured, or assured is
irretrievably deprived of it
No notice of abandonment
required
KEY REFERENCE
Marine Insurance Act 1906
Sections 61 & 62
Slide 4 · 3/4
MARINE INSURANCE
GENERAL AVERAGE
ADJUSTER
The specialist who prepares the General Average adjustment
1
Examine the Casualty
• Examines the casualty, master's declaration and supporting evidence.
• Determines which sacrifices and expenditures qualify as General Average under the applicable law and York Antwerp Rules.
2
Determine Contributory Values
• Determines the contributory values of the interests involved (e.g. ship, freight, cargo and any other property in the common maritime adventure).
• Under York Antwerp Rules 2016, Rule G, General Average is adjusted for both loss and contribution on the basis of values at the time and place where the common maritime adventure ends.
3
Determine Allowances
• Assesses what is properly allowable as a General Average sacrifice or expenditure, such as:
• Qualifying cargo sacrifices
• Damage to ship or cargo in a qualifying act (e.g. damage caused by water in extinguishing a fire)
• Salvage charges
• Temporary repairs
• Port of refuge expenses
• Wages and maintenance of the master, officers and crew, together with fuel and stores consumed, where allowable under the York Antwerp Rules (e.g. qualifying prolongation of the voyage).
4
Prepare the Adjustment
• Calculates the total General Average allowances, contributory values and each interest's rateable contribution.
• Produces a detailed General Average adjustment for settlement by the parties, subject to applicable contractual terms and any dispute.
KEY REFERENCES
York Antwerp Rules 2016
CMI General Average Guidelines 2022
Slide 5 · 4/4
MARINE INSURANCE
HOW GENERAL AVERAGE
IS APPORTIONED
From sacrifice to settlement
TOTAL GA ALLOWANCES
Determined by the
Average Adjuster
CONTRIBUTORY VALUES
Contributory values of
the interests involved
(e.g. ship, freight, cargo and
any other property in the
common maritime adventure).
RATEABLE CONTRIBUTIONS
Each contributing interest
bears its proportion according
to its contributory value.
FINAL GA ADJUSTMENT
Sets out:
GA allowances
Contributory values
Contributions payable
Amounts due from the
respective interests
The adjustment forms the basis
for determining the amounts
payable by the respective
interests, subject to the
applicable contractual terms
and any dispute.
INSURANCE RECOVERY FOR GA
Under Marine Insurance Act 1906, Section 66(4):
GA EXPENDITURE
The assured may recover
from the insurer the proportion
of the loss falling on the assured,
subject to the policy.
GA SACRIFICE
The assured may recover
the whole loss from the insurer
without first enforcing
contribution from the other
parties liable to contribute.
KEY REFERENCES
Marine Insurance Act 1906 – Section 66
York Antwerp Rules 2016 – Rule G
Drafted by SailR from our daily lessons. AI-drawn illustration. Simplified to explain the idea, not to scale. Last updated 19 Oct 2026.
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