Ricafort, Charly

Quemado, Ma. Aprille

Aborka, Rio Rina

Espinosa, Heloisa Marea

Firmeza, Mary Louraine

SECTIONS 131 -140

SEC. 131. A total loss may be either actual or constructive.

SEC. 132. An actual total loss is caused by:

(a) A total destruction of the thing insured;
(b) The irretrievable loss of the thing by sinking, or by being broken up;
(c) Any damage to the thing which renders it valueless to the owner for the purpose for which
he held it; or
(d) Any other event which effectively deprives the owner of the possession, at the port of
destination, of the thing insured.

Loss- loss in insurance means the injury or damage sustained by the insured in
consequence of the happening of one or more of the accidents or misfortune insured
against by the marine insurer.
Two kinds of loss:
(1) Total
(2) Partial
Actual loss- there is actual loss if the subject matter is destroyed or so damaged as to
cease to be a thing of the kind insured or when the insured is irretrievably deprived of.
Total loss is caused by:
1. Total destruction of the thing insured;
2. 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.
Note: there is actual loss if the vessel is rendered valueless to the owner. It is not
necessary that there should be an actual or total loss or destruction of all the different
parts of the entire vessel to render it valueless. Thus, if the ship, when repaired, will not
be worth the sum which it would be necessary to expend upon her, the repairs are,
practically speaking, impossible, and it is a case of total loss. Also, the complete physical
destruction of the subject matter is not essential to constitute an actual total loss.

SEC. 133. A constructive total loss is one which gives to a person insured a right to abandon,
under Section 141.

Constructive total loss- where “the thing insured has been reduced to such a state or
placed in such position by the perils insured against as to make its total destruction or
annihilation though not inevitable, yet highly imminent or its ultimate arrival under the
terms of policy , though not utterly hopeless, yet exceedingly doubtful. This kind of loss is
sometimes called “commercial total loss” or a “conventional total loss”. A constructive
total loss is one which gives to a person insured a right to abandon, under Section 141.

SEC. 134. An actual loss may be presumed from the continued absence of a ship without being
heard of. The length of time which is sufficient to raise this presumption depends on the
circumstances of the case.
Presumed actual loss
Generally, the fact of actual loss should be established by sufficient evidence. The
following are exceptions which must concur:
1. Continued absence of the ship for a considerable length of time; and
2. The vessel has not been heard of.

SEC. 135. When a ship is prevented, at an intermediate port, from completing the voyage, by the
perils insured against, the liability of a marine insurer on the cargo continues after they are thus
reshipped.
Nothing in this section shall prevent an insurer from requiring an additional premium if the hazard
be increased by this extension of liability.

Liability of insurer in case of reshipment:

 If the original ship be disabled, and the masters, acting as the agent of the merchant
and the shipowners, forward the cargo in another ship, such necessary and justifiable
change of ship will not discharge the underwriter on the goods from liability for any
loss which may take place on goods subsequently to such reshipment.
 This rule will not be obligatory where resort must be had to distant places to procure
a vessel, and there are serious impediments in the way of putting the cargo on board
(Byrant vs. Commonwealth Insurance Co.)
 In any case, the insurer may require an additional premium if the hazard be increased
by the extension of liability.

SEC. 136. In addition to the liability mentioned in the last section, a marine insurer is bound for
damages, expenses of discharging, storage, reshipment, extra freightage, and all other expenses
incurred in saving cargo reshipped pursuant to the last section, up to the amount insured.
“Nothing in this or in the preceding section shall render a marine insurer liable for any amount in
excess of the insured value or, if there be none, of the insurable value.

Additional liability of insurer of goods

 A marine insurer is bound for damages, expenses of discharging, storage, reshipment,
extra freightage, and all other expenses incurred in saving cargo reshipped pursuant
to the last section, up to the amount insured.
 The expenses refer to those necessary to complete the transportation of cargo
reshipped under Sec. 135. The insurer is liable for them in addition to paying for any
loss or damage which may take place on the goods, due to perils insured against.
However, the liability of the insurer cannot exceed the amount of the insurance.

SEC. 137. Upon an actual total loss, a person insured is entitled to payment without notice of
abandonment.

 This happens in actual loss (see Sec. 132).

 In marine insurance, no notice of abandonment is required for recovery of loss in
cases of actual total loss.

SEC. 138. Where it has been agreed that an insurance upon a particular thing, or class of things,
shall be free from particular average, a marine insurer is not liable for any particular average loss
not depriving the insured of the possession, at the port of destination, of the whole of such thing,
or class of things, even though it becomes entirely worthless; but such insurer is liable for his
proportion of all general average loss assessed upon the thing insured.
Right of the Insured in General Average

 Where it has been agreed that an insurance upon a particular thing, or class of things,
shall be free from particular average, a marine insurer is not liable for any particular
average loss not depriving the insured of the possession, at the port of destination, of
the whole of such thing, or class of things, even though it becomes entirely worthless;
but such insurer is liable for his proportion of all general average loss assessed upon
the thing insured.

Liability of the insurer as to averages

 Generally, the marine insurer is liable both for general average and particular average
loss. However, the insurer is not liable when there is “Free From Particular Average”
Clause in the policy making the insurer liable only for general average.

Free From Particular Average Clause (FFPA Clause) - A clause agreed upon in a
policy of marine insurance in which it is stated that the insurer shall not be liable for a
particular average.

 Exception to the above exception is Sec. 138, which states when particular average
loss has the effect of depriving the insured of the possession at the port of destination
of the whole of the thing insured the insurer becomes liable as to averages.

SEC. 139. An insurance confined in terms to an actual loss does not cover a constructive total
loss, but covers any loss, which necessarily results in depriving the insured of the possession, at
the port of destination, of the entire thing insured.

 Actual loss is defined under Sec. 132.

 Constructive loss is defined under Sec. 133.
 The loss contemplated herein deprives the insured of the possession of the thing
insured upon arrival at the port of destination.
 Under Sec. 139, abandonment may be availed of if the loss is more than three-fourths
of its value or the expense to recover it from peril.

SEC. 140. Abandonment, in marine insurance, 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.

 This section defines abandonment as 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.
 The relinquishment must be actual.
 Sec. 140 is a requisite for a valid abandonment in marine insurance.