Page 173 - DCOM309_INSURANCE_LAWS_AND_PRACTICES

Insurance Laws and Practices

Notes Effect of Constructive Total Loss

Where there is a constructive total loss, the assured may either treat the loss as a particular loss
or abandon the subject matter insured to the insurer and treat the loss as if it were an actual total
loss.

Notice of Abandonment

It is a notice by the assured to the insurer that he abandons all interests in the subject-matter of
insurance unconditionally to the insurer. As per section 62, the rules regarding abandonment
are:
1. A notice of abandonment should be given by the insured to the insurer. If he fails to do so,
the Loss can only be treated as a partial Loss.

2. The insurer may waive notice of abandonment.
3. Notice of abandonment may be given in writing, or by word of mouth or partially in
writing and partly by word of mouth. There is no specified wording, which indicate the
intention of the assured to abandon his insured interest in the subject matter insured, but
surely it must be unconditional.

4. Notice of abandonment must be given with reasonable time after the receipt of reliable
information of the Loss, but where the information is of a doubtful character, the assured
is entitled to a reasonable time to make enquiry and then to notify.
5. Where the notice of abandonment is properly given, the rights of assured are not prejudiced
by the fact that the insurer refuses to accept the abandonment.

6. The acceptance of abandonment may be either express or implied from the conduct of the
insurer. The mere silence of the insurer after notice does not amount to an acceptance.
7. Once the notice of abandonment is accepted, the abandonment is irrevocable. The acceptance
of the notice conclusively admits liability for the loss.

Effect of Abandonment

Where there is a valid abandonment, the insurer is entitled to take over the interest of the
assured in whatever may remain of the subject matter insured, and all proprietary rights incidental
thereto.

9.5.2 Types of Partial Loss

In marine insurance, the term partial loss is any loss other than a total loss. The partial loss as
also stated above may be classified into the following:

Particular Average Loss
When the subject matter is partially lost or damaged by a peril insured against, it is called
particular average loss.
A particular average loss must fulfil the following conditions:

Only a particular subject matter is lost or damaged.
The loss should be accidental.

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