Constructive Total Loss
When goods or a ship may be treated as a total loss under MIA 1906 s.60 and ICC clause 13, and why the agreed value is not the test.
A constructive total loss arises where the subject-matter is reasonably abandoned because an actual total loss appears unavoidable, or because saving it would cost more than it would be worth. For goods, the Marine Insurance Act 1906 s.60(2)(iii) compares the cost of repairing and forwarding against their value on arrival, and s.27(4) keeps the agreed value out of the test unless the policy provides otherwise.
The full article will cover notice of abandonment, the hull and cargo tests, Institute Cargo Clauses clause 13, and the contrasting rule in the 2025 PRC Maritime Code, which measures against the insured value. The cargo insured value article covers how this topic affects the sum insured on a cargo policy.