The total loss occurs in 3 ways: i) actual destruction of the subject matter insured, i.e. destruction of the cargo of coal by fire. ii) Loss of specie – the damage of such a nature that the cargo cannot be used for the intended purpose e.g. cement damaged by water, turned in t the stone which is not useful as cement or potatoes damaged by sea water cannot be used for human consumption. Iii) When the person irretrievably deprived of the subject matter insured e.g. Loss by theft. The cargo is somewhere but where that nobody knows. In case of total loss the liability of insurers is for the sum insured.


In CTL, the loss is inevitable. E.g. the ship is sinking or when either the recovery is not possible or the cost of recovery is likely to exceed the insured value when the expenditure will be incurred.

C) General Average (G.A.) LOSS: –

It is a loss caused by or directly consequential on a general average act. This act is one where extra-ordinary sacrifice or expenditure is voluntarily and reasonably made or incurred in time of peril for the purpose of preserving the properly imperilled in the common adventure. E.g. When cargo is jettisoned (to throw or drop from ship) to save the ship, the owner of the cargo can claim the insured amount as general average sacrifice because of his sacrifice the adventure is saved. Similarly, in the event of engine break down when the vessel is taken to port of refuge the expenses incurred for the entry, unloading, repairs, reloading, etc. are part of general average expenditure. The liability of insurer is to pay proportionate share of the total expenditure. GA is payable only when the insured ship or cargo is saved.


When a person independent of a contract saves the ship or cargo or both from the danger, can claim reasonable reward. The amount of the reward is to be paid proportionately by all the interest receiving the benefits. This is the liability of insurers.

E) Particular Average (PA): –

The particular average is partial losses. The losses other than total or GA are all partial loses. E.g. When two packages out of six are not delivered.


This refers to the amount payable to the insured which is the difference of insured value and the net proceeds of the sale of insured goods damaged by the perils covered. Goods are sold for the best available price at an intermediate port because it is found that by the time, it reaches at final port of discharge, it will be a total loss.

G) Extra Charges:

These are additional expenses incurred for the claim purpose – like survey fees, segregation charges, auction fees etc. They are payable in addition to the claim.