Marine losses - SS2 Commerce Lesson Note

Marine losses refer to various types of damage or loss that can occur to ships, cargo, or other maritime property during sea voyages or transportation by sea. 

Total Loss:

Total loss occurs when the insured property, such as a ship or cargo, is completely destroyed or irretrievably lost. It means that the property cannot be recovered or repaired and is considered a complete loss.

Actual Total Loss:

Actual total loss refers to a situation where the insured property is either physically destroyed or lost beyond recovery. It means that the property is completely destroyed, missing, or damaged to such an extent that it cannot be repaired or salvaged.

Constructive Total Loss:

Constructive total loss occurs when the cost of recovering or repairing the insured property exceeds its insured value. It means that the property is still physically present but is damaged to an extent that it is uneconomical or impractical to repair.

Partial Loss:

A partial loss happens when the insured property sustains damage that is repairable or when only a portion of the property is lost. It means that the property can be repaired or salvaged, and it does not result in a complete loss.

General Average Loss:

General average loss refers to a situation in which a voluntary sacrifice or expenditure is made during a maritime voyage to save the ship, cargo, or crew from a common peril. The loss or expense incurred is proportionally shared by all parties involved, including the shipowner, cargo owners, and insurers.

Particular Average Loss:

Particular average loss refers to a loss or damage suffered by a specific party or interest in a maritime venture. Unlike general average loss, particular average loss is not shared by all parties but is borne by the affected party or their insurer alone.

Marine losses can have significant financial implications for shipowners, cargo owners, and insurers. Insurance coverage for marine losses helps mitigate the financial risks associated with such losses, providing compensation and support to the affected parties.