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* An owner of a damaged and salvaged ship will not usually spend more on repairs than the value of the ship after repair. (The ship may qualify as a constructive total loss.)

* The owner is not obliged to claim a constructive total loss; he may choose to claim a 100% partial loss, make repairs and retain the ship.

* If he wishes to claim a constructive total loss, the owner must abandon the property to the insurer.


* After a valid abandonment, the insurer is entitled to take over the interest of the assured in whatever remains of the insured property, including all proprietary rights in it,



e.g.: the right to any freight in the course of being earned when the casualty occurred; the right to take over the ship; the right to dispose of the ship as he thinks fit and retain all the proceeds (even if more than the claim paid).

* When a ship is badly damaged and the owner fears a constructive total loss the owner gives notice of abandonment to the underwriter. Tenders are taken from salvors and repairers.

It is ascertained whether expenditure will exceed the repaired value. Items taken into account in the calculation include

estimated repair costs; the cost of future salvage operations; any general average contributions to which the ship would be liable if she were repaired.

If the estimated total outlays exceed estimated repaired value, a constructive total loss is shown and the underwriter will be liable for a total loss. The insurer pays the claim and takes over proprietary rights in the vessel if she is eventually recovered.

in the case of an actual total loss no notice of abandonment need be given.