Constructive Total Loss (CTL) : Unlike the actual total loss, CTL is not a physical loss and is not absolute. CTL may be defined as a total loss when the cost of saving, repairing or reconditioning the insured goods is more than the value of goods. For example, a machine while loading on board the carrier is damaged and the cost of repairing is so prohibitive that the insured may consider this damage as total loss. On examination of the nature of damage and the expected cost of repairing, the insurance company may also consider it as a total loss.

CTL may also be claimed when an actual tots1 loss seems unavoidable. For example, cargo in a ship while ground or ashore cannot be taken: out of the ship within a reasonable cost, the assured may /claim CTL.

While constructive CTL the insured is required to abandon (or leave) his interest in the insured cargo in favour of the insurance company. This is because the insured cannot retain the goods as well as claim total loss and he has, therefore, to forego his rights in the goods.