constructive total loss

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A loss in which the item insured is not totally destroyed but is so severely damaged that it is not financially worth repairing. The Marine Insurance Act 1906 defines a constructive total loss as one in which ‘the subject matter insured is reasonably abandoned on account of its actual total loss appearing to be unavoidable, or because it could not be preserved from actual total loss without an expenditure which would exceed its value when the expenditure had been incurred.’

Subjects: Law — Business and Management.

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