Shyama Pada Das

Consultant
United Insurance Co. Ltd.

MARINE CARGO LOSSES:

In marine cargo insurance there are only two basic types of loss under the policy. These are (a)
“Partial Loss” and (b) “Total Loss”.

1. PARTIAL LOSS : Any loss other than a total loss, is a partial loss. (Sec 56(1) of M.I.A.
1906). Partial Loss may be either (i) Particular Average Loss or (ii) General Average
Loss. The Marine Insurance Act, 1906 Sec. 64(I) defines Particular Average Loss as a
partial loss of the subject matter-insured, caused by a peril insured against, and which is
not a general average loss. It means that when a loss is a fortuitous one (accidental) it is a
particular average loss and not a general average. It only remains to establish whether the
fortuity as a peril covered by the policy to determine whether the loss is recoverable
under the policy from the insurer. The terms General Average has been defined as a loss
arose owing to the intentional activities of human being and not occasioned accidentally.
When both elements such as fortuity and intentional activities are involved in a single
loss, the extent thereof to be segregated.

There are certain expenses which are insured as particular average loss. These expenses
such as survey fees and sale charges are called “particular charges”. These do not come
within the category of particular average but are recoverable from the insured if there is a
recoverable claim for particular average.

2. TOTAL LOSS : A total loss may be either an Actual Total Loss, or a Constructive Total
Loss (Sec. 56(2) of M.I.A. 1906).

(a) Actual total loss : Where the subject matter insured is destroyed, or so damaged
as to cease to be a thing of the kind insured, or where the assured is irretrievably
deprived of the subject matter, there is an actual total loss.

An’ actual total loss’ occurs in four circumstances ;

i) The goods are completely destroyed.
ii) The assured is irretrievably deprived of the goods
iii) The goods are no longer the thing which were insured
iv) The goods are on a ship that has been posted as missing (after a reasonable
time there was no trace – Sec. 58 Missing Ship)
In the case of actual total loss no notice of abandonmantment need be given.

(b) CONSTRUCTIVE TOTAL LOSS :

It sometimes happens that the subject matter insured, whether ship or goods, is
placed in a position by an insured peril where it has not actually suffered a total
loss as defined above but where the expenditure to prevent such a loss would be
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 greater than the value of the property when salved. The insured, under such a
situation, is entitled to abandon the property to the insurer and claim a total loss.
However, no claim for constructive total loss is valid unless a notice of
abandonment is given.

Section 60-63 of the Marine Insurance Act 1906 precisely deal with Constructive
Total Loss and Abandonment aspects which should be minutely studied.

The circumstances which give rise to a Constructive Total Loss are described
below in a nut-shell.

i) The assured is deprived of the ship or goods, as the case may be, by an
insured peril, and it is unlikely that he will recover the insured property.

ii) The assured is deprived of the ship by an insured peril and the cost of
recovering the same would exceed its value when recovered or in the case
of damage the cost of repairing the damage would exceed the value of the
ship when repaired.
iii) The assured is deprived of the goods by an insured peril and the cost of
recovery would exceed the value of the goods when recovered or in the
case of damage the cost of repairing the damage and forwarding the goods
to their destination would exceed the value of the goods on arrival at the
destination.

The provisions of the Marine Insurance Act on the subject of abandonment are contained in the
following sections, viz :

(1) Subject to the provisions of this section, where the assured elects to abandon the subject
matter insured to the insurer, he must give notice of abandonment. If he fails to do so the
loss can only be treated as a partial loss.

(2) Notice of abandonment may be given in writing or by word of mouth, or partly in writing
and partly by word of mouth, and may be given in any terms which indicate the intention
of the assured to abandon his insured interest in the subject matter insured
unconditionally to the insurer.

(3) Notice of the abandonment must be given with reasonable diligence after the receipt of
reliable information of the loss, but where the information is of a doubtful character the
assured is entitled to a reasonable time to make inquiry.

(4) Where notice of abandonment is properly given, the rights of the assured are not
prejudiced by the fact that the insurer refuses to accept the abandonment.

(5) The acceptance of an abandonment may be either express or implied from the conduct of
the insurer. The mere silence of the insurer after notice is not an acceptance.

(6) Where notice of abandonment is accepted the abandonment is irrevocable. The

acceptance of the notice conclusively admits liability for the loss and the sufficiency of
the notice.

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(7) Notice of abandonment is unnecessary where, at the time when the assured receives
information of the loss, there would be no possibility of benefit to the insurer if notice
were given to him.

(8) Notice of abandonment may be waived by the insurer.

(9) Where an insurer has re-insured his risk, no notice of abandonment need be given by him.

It is usual for notice of abandonment to be given to the underwriter in writing, by a formal letter
in which the assured advises the underwriter that he abandons his interest in the property insured,
and claims from the underwriter payment of a total loss. It is not essential, however, that written
notice should be given (subsection (2), provided it is made clear that abandonment is tendered. In
the case, for instance, of Cohen, Sons & Co. v. Standard Marine Insurance Co., where the
assured wrote to his underwriters saying that the vessel insured was a total loss and asking to be
paid the sum insured, it was held that sufficient notice of abandonment has been given.

A vessel having been driven ashore on a remote rocky and dangerous coast at a season of the
year when storms are prevalent and there being every prospect of her breaking up, an actual total
loss would appear to be unavoidable. As regards expenditure the words of Maule J. in the case of
Moss v. Smith may be quoted as a “nutshell” illustration of the principle involved: “A man may
be said to have lost a shilling when he has dropped it into deep warter, though it might be
possible, by some every expensive contrivance, to recover it. “ Who for instance, would be
foolish enough to spend ₤ 10,000 on repairing a ship which when repaired would be worth only
₤ 8,000

It will be noted that sub-section (1) of Section 60 of the Act stipulates that there is a constructive
total loss where the subject matter is “reasonably abandoned”

------------------------- X ------------------------

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PROCEDURE OF CARCO AND HULL CLAIMS
SETTLEMENT INCLUDING RECOVERY.

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 Shyama Pada Das
Consultant
United Insurance Co. Ltd.

MARINE LOSSES:

In marine insurance there are only two basic types of loss under the policy. These are “Partial
Loss” and “Total Loss”.

1. PARTIAL LOSS : Any loss other than a total loss, is a partial loss. (See 56(1) of M.I.A.
1906). Partial Loss may be a Particular Average Loss or a General Average Loss. The
Marine Insurance Act, 1906 See. 64(I) defines Particular Average Loss as a partial loss of
the subject matter-insured, caused by a peril insured against, and which is not a general
average loss. It means that when a loss is a fortuitous one it is a particular average and
not a general average. It only remains to establish whether the fortuity as a peril covered
by the policy to determine whether the loss is recoverable under the policy from the
insured. General Average has been defined as a loss arose owing to the intentional
activities of human being and not occasioned accidentally.

There are certain expenses which are insured pursuant to a particular average loss. These
expenses are called “particular charges” such as survey fees and sale charges. These do
not come within the category of particular average but are recoverable from the insured if
there is a recoverable claim for particular average.

2. TOTAL LOSS : a Total loss may be other an Actual Total Loss, or a Constructive Total
Loss (Sec. 56(2) of M.I.A. 1906).

(a) Actual total loss : Where the subject matter insured is destroyed, or so damaged
as to cease to be a thing of the kind insured, or where the assured is irretrievably
deprived of the subject matter, there is an actual total loss.

An’ actual total loss’ occurs in four circumstances ;

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 i) The goods are completely destroyed.

ii) The assured is irretrievably deprived of the goods

iii) The goods are no longer the thing insured (Termol Loss of angelic.

iv) The goods are on a ship that has been posted as missing (after a reasonable
time no trace – Sec. 58)

In the case of actual total loss no notice of abandonmantment need the given.

(b) CONSTRUCTIVE TOTAL LOSS :

It sometimes happens that the subject matter insured, whether ship or goods, is
placed in a position by an insured peril where it has not actually suffered a total
loss as defined above but where the expenditure to prevent such a loss would be
greater that the value of the property when saved. The insured, under such a
situation, is entitled to abandon the property to the insurer and claim a total loss.
However, no claim for constructive total loss is valid unless notice of
abandonment is given.

Section 60-63 of the Marine Insurance Act 1906 precisely deal with Constructive
Total loss and Abandonment aspects. Everyone is reconstructive to study these
sections very closely.

The circumstances which give rise to a Constructive Total Loss are described
below in a nut-shall.

i) The assured is deprived of the ship or goods, as the company be, by an

insured peril, and it is unlikely that he will recover the insured property.
ii) The assured is deprived of the ship by an insured peril and the cost of
recovering the same would exceed its value when recovered or in the case

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 of damage the cost of repairing the damage would exceed the value of the
ship when repaired.

iii) The assured is deprived of the goods by an insured peril and the cost of
recovery would exceed the value of the goods when recovered or in the
case of damage the cost of repairing the damage and forwarding the goods
to their destination would exceed the value of the goods on arrival at the
destination.

The insurance against loss of or damage to property by the perils of the sea (i.e. Marine
Insurance) may be classified under three heads :-

a) HULL : This refers to the insurance of ship (i.e. hull and machinery) by the ship-owner
against maritime perils, which are, briefly, perils of the sea such a heavy whether,
atranding collision, fire and similar perils. The ship-owner naturally has an insurable
interest as owner. Such as insurance is normally arranged for a period of twelve months.

b) CARGO : This refers to goods and/or merchandise imported or exported from or to

various parts of the world. Insurable interest exists on behalf of both buyer and seller, at
some time during transit from the one to the other. In consequence, the terms of contract
of sale may provide either for the buyer or for the seller to insure. Cargo is normally
insured against all maritime and transit risks, including war risks.

c) FREIGHT : Freight is the sum paid for transporting goods. There are various types of
freight and the most important is bill or lading freight (i.e. freight payable to a ship-owner
for the carriage of goods by sea). When goods are lost by marine perils, freight, or a
proportion of it, will be lost. The person interested therefore, has an insurable interest. If
the freight is prepaid it is merged in the insurable value of the cargo, but if it is payable at
destination it is at ship owner’s risks.

Another class of Marine Claims is.

GENERAL AVERAGE LOSS : Historical records reveal that systems of general average,
involving a contribution from the interests involved in a common maritime adventure, have been
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in existence since the earliest days of sea borne traffic. The subject of the system was to
encourage ship master to make effort to attain safely whenever a peril threatened the joint
adventure. The owners of cargo authorized the master of the ship to make a prudent and timely
sacrifice of their property. They were aware of the fact that their loss would be made good to
them by ratable contribution from the other interests on the completion of the voyage. In course
of time General Average has been recognized as part of the law of the sea in all maritime
countries.

There have been many legal definitions of general average, but probably the one most often
quoted is that of Lawrence J. in prickly V. Preserve :- “All loss which arises in consequence of
extra-ordinary Sacrifices made or expenses incurred for the preservation of the ship and cargo
comes within general average and must be Lorne proportionately by all who are interested”

The Marine insurance Act, 1906, Section 66 defines General Average as under :-

66(1) A General Average Loss is a loss caused by or directly consequential on a general

average act., It includes general average expenditure as well as a general average
sacrifice.

(2) There is a general average act where any extra-ordinary sacrifice or expenditure is
voluntarily and reasonably made or incurred in time of peril for the purpose of preserving
the property imperiled in the common adventure.

(3) Where there is a general average loss, the party on whom it falls is entitled, subject to the
conditions imposed by maritime law, to a retable contribution from the other parties
interested, and such contribution is called a general average contribution.
But, before proceeding to consider there subjects, it will be wall to emphasize the
essential features which must be present in order to give rise to general average
contribution.

a) The common adventure must be in peril. The peril must be real and not
imaginary, and it must be imminent.

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 That is to may it must be “substantial and threatening, and something more than
the ordinary perils of the sea”. The fear of the possibility of encountering a peril is
not sufficient to give rise to a claim for general average contribution, nor is a
mistaken idea that a peril exists when in fact it does not.

b) The sacrifice must be voluntary, ir, in other words, it must be the intentional act
on the part of man as opposed to an accidental loss by maritime peril.

c) The sacrifice or expenditure, as the case may be, must be reasonable made. If it is
a case of sacrifice, when it must be an act done prudently. If it is expenditure, then
it must be fair and reasonable, and it is only allowable in general average so far as
these essentials are complied with.

d) The sacrifice, or expenditure, must be extraordinary in its nature, and not one
which is necessarily involved in performance of the contract of affraightment (For
example, a vessel meets with heavy weather, which threatens to become worse,
and the master decides to increase the speed of his vessel in order to reach port,
the cost of extra fuel consumed is not a general average.)

e) The object of the sacrifice or expenditure must be nothing other or loss than the
preservation of the property imperiled in the common adventures it must not be
for the safety of the ship alone, or of the cargo alone, nor merely for the
completion of the adventure (Example – if the consequence of the peril of the sea
has beret merely render the ship unable to fulfill her contract or the cargo unfit to
be carried on, as for instance, where it is damaged by wetting, acts done to make
either the ship fit to fulfill her contract or the cargo fit to be carried on are not
sufficient on principle to establish a general average sacrifice).

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 f) The loss must be the direct result, or the reasonable consequence of a general
average act. (For instance, in this case of jettison, if water get into hold during the
act of jettison, the damage caused to cargo by the water is allowable in general
average equally with the value of the cargo jettisoned, the reason being that the
risk of incurring such damage, or the likelihood of its happening, would have
been present in the minds of those who resolved to make the primary sacrifice.)

SACRIFICE

(A) CARGO AND FREIGHT :

1. Jettison from under-deck

2. Jettison from on deck, provided that on-deck stowage is in accordance with the
recognized custom of the trade in which the ship is engaged.

3. Water or other means used to extinguish fire on board ship.

4. Discharge and re-shipment for the purpose of floating a stranded ship when in a
position of perils.

(B) SHIPS MATERIALS

1. Masts, Spars, sail or rigging cut away for common safety.

2. Chains and anchors slipped to avert a threatening peril.

3. Damage to a vessel, machinery, ropes, winches, windless and other gear sustained
in endeavours to float a stranded ship when in a position of peril.

4. Damage done in the effort to extinguish a fire on board or in the process of

jettisoning cargo.

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 EXPENDITURTE

1. Expenses incurred in floating a stranded ship if in peril.

2. Inward expenses entering a port of refuge to repair damage to ship.

3. Cost of discharging cargo at a port of refuge for the purpose or repairing damage
to ship.

4. Cost of Warehousing, Warehouse rent on cargo, re-shipment of cargo and

outward expenses leaving the port of refuge, but only when the cause of the vessel
putting into port has been to repair damage which is itself the consequence of a
general average act.

The York Antwerp Rules, 1974 (revision of rules of different years) are normally applied for the
purpose of drawing general average adjustment. These rules were formulated in various
convention/conference. The last meeting was held in Hamburg in March 1974.

In general average claim normally two parties come into picture. They are Insured/claimants and
Insurer. Another party, being “Third Party” may be carrier/bailer and wrong doing vessel. Both
these parties have duties and rights.

In the event of an occurrence likely to give rise to a claim under a policy, there are certain
implied or unwritten duties and certain express or written duties imposed on the insured.

The policy is quite specific on this point. For the purpose of drawing attention of the
insured/claimant it is customary to attach a “red lettered” clause called “Important Notice”, to the
policy, relevant portion of which is appended below for consumption:-

LIABILITY OF CARRIERS, BAILEES, OR OTHER THIRD PARTIES

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It is the duty of the assured and their agents in all cases, to take such measures as may be
reasonable for the purpose of averting or minimizing a loss and to ensure that all rights against
carriers, bailers or other Third Parties are properly preserved and exercised. In particular, the
assured and their agents are required :

1. To claim immediately on the carriers, port authorities or other bailees for any packages
that are missing or that cannot be found.

2. To apply immediately for survey in the docks by carriers, or other Bailees

Representatives if any loss or damage be apparent or for any packages discharged
defective, and to claim on the carriers or other bailees for any loss or damage found at
such survey.

3. In no circumstances, except under written protest, to give clean receipts where goods are
in doubtful condition.

4. To give notice in writing to the carriers, representative or other bailees within three days
of delivery if the loss or damage was not apparent at the time of taking delivery, and to
take prompt arrangements for survey to be held.

NOTE : The consignees or their Agents should make themselves familiar with the
regulations of the port authorities at the port of discharge.

Pertaining to procedure of handling/setting claims, particularly cargo, it should be kept in mind

that each and every claim is not identical. No hard and fast rule for proper handling/settling
claim can be followed, as each and every case is different one which should be decided on its
own merit. However, extreme caution should be exercised and prudent judgment done while
dealing with the matter.

It should be remembered that an insured, as a trustee of the fund generated from the premium
received from the insured’s, is peculiarly placed in his profession and a lot of responsibility
devolves on him. In the course of his discharging duty he must ensure that the insured/claimant

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must be indemnified properly/equitably i.e. the insured/claimant must not receive more or less
than that of his entitlement.

Claim Procedure –

Claims procedure starts right from the reporting of a claim by the insured/claimant to the
underwriter. It is imperative as per condition of policy that the insured/claimant must notify the
loss to the underwriter immediately. On this point cargo claim differs from hull claim. In case of
hull claim the insured/claimant becomes aware of the incident immediately after happening of an
occurrence. Therefore, he is well placed to give notice of claim to the insurer. But in case of
cargo the position is different. Reason being that it is not possible to identify at which point
cargo sustained loss or damage. It is also not possible to trace out the cause of loss or damage
until survey. So, the insured/claimant can not submit claim immediately as required by policy
stipulations. In order to obviate complications in respect of cargo, particularly imported goods, as
per important Notice attached to the policy, the insured/consignees/claimants are authorized to
arrange survey and on completion of other formalities submit claim to the underwriter.

So far as hull claims are concerned, the insured is required to notify accident to the underwriter
immediately. He is also to report the matter to the nearest police station within 24 hours from the
time of accident.

On being intimated, the insurer/underwater appoints a surveyor for assessment of the extent and
cause of damage.

ONUS OF PROOF

In the contract of insurance the onus of proof of loss caused by the insured perils, which may,
subject to terms, conditions and limitations of the relevant policy, entitle an insured/claimant to
compensation from the underwriter, devolves on the insured. To enable claims to be dealt with
promptly, the insureds or their agents are advised to submit all available supporting documents
without delay. It is not possible to say precisely which documents are required for a particular
type of claim. However, common documents necessitated for cargo and hull claims are
summarized below under respective headings :
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CODUMENTS

A) CARGO

1. Original policy/original certificate of insurance

2. Original or copy shipping invoices together with shipping specification and/or weight
note, packing list (not always)

3. Original Bill of lading and/or other contract of carriage.

4. Survey Reports or other documentary evidence to show the extent the loss or damage
(short landing certificate in case of non-delivery)

5. Original Bill of Entry (Not always)

6. Insured’s claim Bill.

7. Copies of correspondence exchanged with the carriers and other parties regarding their
liability for the loss or damage.

8. Copy of Plant (In case of litigation against the carrier/third parties).

9. Loss Voucher duly executed

10. Letter of Subrogation When asked for

11. Letter of Indemnity

12. Affidavit/Note of protest (Not always

13. Other documents as may be required.

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B) HULL

1) Copy of policy ( In case of total loss original policy)

2) Survey Report

3) Note of protest/affidavit

4) Adjuster’s report (if engaged)

5) Deck and Engine log books

6) Master’s and/or Chief Engineer’s detailed report

7) Load Line Certificate (Not always)

8) Classification Society Surveyors report (Not always)

9) Copy of FIR

10) Estimates

11) Receipted accounts for repairs and/or any parts supplied by ship-owners (endorsed by
underwriters surveyor as being fair and reasonable).

12) Accounts covering any dry docking and general expenses relating to the repairs (duly
endorsed by underwriter’s surveyor).

13) Registration Certificate, Safety equipment Certificate, Survey Certificate, Competency

Certificate of Master.

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14) Letter of Subrogation

15) Letter of Indemnity

16) Loss Voucher duly executed

SURVEY :

Survey aspect has been explained above. In cargo case normally the insured appoints a surveyor.
In hull case surveyor is appointed by the insurer. Whoever appoints a surveyor it should be done
without delay. Late appointment may give rise to complication and allow room for the insured to
adopt malpractice. It quite often destroy evidence and also reduce the possibility of minimizing
the loss. Furthermore, late appointment frequently creates hindrances on the way of surveying
and assessing the loss properly. In case of big losses or complicated losses it is prudent to
appoint more than one surveyor.

Conducting of survey for ascertaining cause and assessing loss is a legal requirement. In contract
of insurance it attaching paramount importance. The insurance Act 1938 Rules 1958 and further
amendment in 1988 stipulate that each and every marine loss both hull and cargo (excepting
Non-delivery claim wheel Shot-Landing Certificate will do) exceeding Tk. 5,000/- must be
surveyed by a registered surveyor duly licensed by the Government. The Surveyors are neutral
and highly experienced in their profession and assess the loss prudently.

RECORD SYSTEM :

As soon as a claim is reported to the underwriter, it should be recorded in a register called

“Claim Lodged Register” It should be borne in mind that proper record system reflects the
efficiency of an organization. It reduces delay enables control of procedure and creates a good
image of the organization. A claim lodged register normally contains the following information :

a) A seriatim claim number (yearwise)

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b) Policy/Certificate of insurance

c) Name of the insured/claimant

d) Subject matter issued

e) name of the carrying vessel (for cargo

f) Voyage (From and To)

g) ………………Period of Insurance (for Hull)

h) Sum Insured

i) Risk Covered

j) Estimated amount of loss

k) Name of the Surveyors / Adjusters

l) Remarks, if any.

ACKNOWLEDGEMENT OF THE CLAIM

As soon as the claim is registered a formal acknowledgement is required to be sent quoting the
claimant’s reference and the claim number. However, if the submitted documents are incomplete
a request for the missing documents will be made by letter which will also formally acknowledge
receipt of the claim. Any further information needed will be requested at the same time.

While making correspondence to the insured/claimants and/or their agents in connection with
claims it must always be borne in mind that all such correspondence should be made “Without
Prejudice”. These two words on the top of correspondence always safeguard the interest of the

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insurer particularly when a correspondence is attempted to be interpreted by the insured/claimant
as acceptance of liability by the insurer. Sometimes, these two words take care of loose or
immature correspondence which may tantamount to commitment of liability on behalf of the
insurer. In other words, the legal position is not disturbed when a letter is written subject to
“Without Prejudice” even though the letter may apparently sound a commitment of liability.

LETTER FILE

A copy of each letter sent to the insured/claimant should be retained in the claim file. It is
advisable to have an additional copy prepared which can be preserved in a main file in date
order. Thus if a client writes in reply to a letter but omits the reference, quoting only the letter
date (which is quite common), the insurer can trace the claim file by turning up the letter in the
date file.

SCRUTINISATION:-

Serutinisation, explanation, clarification and analysis etc., you on all the times right from
inception of intimation of loss. Nevertheless, while putting up the claim for decision, particular
attention should be given to serutinise all documents properly. Important as pects to be looked
for are :-

1) Whether the policy is inforce

2) Whether premium has been paid and credited

3) Whether the loss has been proximately caused by a peril insured against (principle
of proximate cause should be studied thoroughly)

4) Whether there has been a change of interest prior to loss and whether the new
interest, if any, has been covered specifically.

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 5) Whether the survey report contains all the relevant information that are necessary
for taking final decision in the claim. Survey report should be minutely
scrutinized.

6) Whether there has been any breach of material factory any breach of warranty or
policy condition. Sometimes copy of proposal form is important.

7) Whether the insured complied with the requirement as laid down in Important
Notice and Policy.

8) In course of securitization it may sometimes be found that the loss was caused by
the wrond-doing of third party. This third party may be prima-facie responsible
for the loss. As soon as this is apprehended the insured should be noticied to lodge
claim with the wrond-door. The insured/claimant should also be cautioned not to
make any compromise with the liable party. Copies of correspondence exchanged
between insured/claimant and insured from time to time should be forwarded to
the claim department for attention.

IMPORTANCE OF ORGINAL POLICY/CERTIFICATION OF INSURANCE

Marine policy/certificate is freely assignable without the consent of the insurer. In other classes
of insurance including Hull the position is reverse. In those cases assignment is permissible with
the agreement of the insurer. However, proceeds under the policy can be assigned. In view of the
circumstances, except where agreed otherwise, the original policy and/or certificate must be
produced to the insurer at the time of presenting claim for settlement. There is however, a
procedure for settlement of a claim without production of the policy or certificate where the
document is misplaced or lost. In such a situation the insurer will provide a form of indemnity
which must be completed and signed by the assured. As goods pass on to different owners many
times during transit before reaching final destination and as marine p[olicies are freely and
frequently assignable even by blank endorsement the original policy/certificate attaches immense
importance. If this document is not surrendered at the time of submission of claim, the insurer

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may be required to indemnify more than once. It may be kept in mind that as per Marine
Insurance Act, 1906 the claimant is to prove insurable interest at the time of loss.

SALVAGE :

Salvage is the residue of the subject matter of insurance left after happening of an accident/loss.
In most of the claim whether the loss is a total or partial, it is found that there is considerable
amount of salvage left. Careful handling of salvage may sometimes fetch unexpected amount
which ultimately reduce/minimize the liability of the insurer. When the extent of damage to the
property is not extensive, surveyors may simply recommend percentage of depreciation of the
property or deduct a reasonable lump sum from the value of the damaged property. In case of big
losses, personal supervision of salvage is desired and the salvage so found is sold through press
tender.

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