Question

If insured cargo can be salvaged from a damaged vessel, but the cargo is damaged beyond repair and the repair costs would exceed the cost to replace, an insurer would consider the cargo a/an:

Option 1: Partial Loss
Option 2: Constructive Total Loss
Option 3: Actual Total Loss
Option 4: Abandonment Loss

Answer 1

If insured cargo can be salvaged from a damaged vessel but is damaged beyond repair and repair costs exceed replacement costs, the insurer would consider it a Constructive Total Loss.

Step-by-step explanation:

If insured cargo can be salvaged from a damaged vessel, but the cargo is damaged beyond repair and the repair costs would exceed the cost to replace, the insurer would consider the cargo as a Constructive Total Loss. In this case, it is more economical for the insurer to pay the replacement cost rather than cover the repair expenses. A Constructive Total Loss occurs when the cost of repairing or recovering the damaged property is greater than the value of the property itself.