LOSSES

Delfin, Cindy
Garcia, Rosie
Gerano, Paul
Nava, Patrice Marie
Patricio, Justine

What are the types of losses in Marine Insurance?

1. Partial Loss
2. Constructive Total Loss
3. Actual Total Loss

What is a partial loss?

"Every loss which is not total is partial." (Section 130, Insurance Code of the Philippines)

What is an actual loss?

An actual total loss is caused by:
1. A total destruction of the thing insured;
2. The irretrievable loss of the thing by sinking, or by being broken up;
3. Any damage to the thing which renders it valueless to the owner for the purpose for which he held it;
or
4. Any other event which effectively deprives the owner of the possession, at the port of destination, of
the thing insured. (Section 132, Insurance Code of the Philippines)

What is a constructive total loss?

It is sometimes referred to as a technical total loss. As a consequence, it gives the insured a right to
abandon. Abandonment is necessary in order to recover for a total loss.
A person insured by a contract of marine insurance may abandon the thing insured, or any particular
portion thereof separately valued by the policy, or otherwise separately insured, and recover for a total loss
thereof, when the cause of the loss is a peril insured against:
1. If more than three-fourths (¾) thereof in value is actually lost, or would have to be expended to
recover it from the peril;
2. If it is injured to such an extent as to reduce its value more than three-fourths (¾);
3. If the thing insured is a ship, and the contemplated voyage cannot be lawfully performed without
incurring either an expense to the insured of more than three-fourths (¾) the value of the thing
abandoned or a risk which a prudent man would not take under the circumstances; or
 4. If the thing insured, being cargo or freightage, and the voyage cannot be performed, nor another ship
procured by the master, within a reasonable time and with reasonable diligence, to forward the
cargo, without incurring the like expense or risk mentioned in the preceding subparagraph. But
freightage cannot in any case be abandoned unless the ship is also abandoned. (Section 141,
Insurance Code of the Philippines)

What is abandonment?
Abandonment is the act of the insured by which, after a constructive total loss, he declares the
relinquishment to the insurer of his interest in the thing insured. It must satisfy the following:
5. An abandonment must be made within a reasonable time after receipt of reliable information of the loss,
but where the information is of a doubtful character, the insured is entitled to a reasonable time to make
inquiry.
6. An abandonment must be neither partial nor conditional.
7. Abandonment is made by giving notice thereof to the insurer, which may be done orally, or in writing:
Provided, That if the notice be done orally, a written notice of such abandonment shall be submitted
within seven (7) days from such oral notice.
8. A notice of abandonment must be explicit, and must specify the particular cause of the abandonment, but
need state only enough to show that there is probable cause therefor, and need not be accompanied with
proof of interest or of loss. (Sections 142-146, Insurance Code of the Philippines)