Constructive Total Loss Marine Hull Insurance Policy

Marine insurance is a type of policy that covers the loss or damage of a vessel's hull, machinery, and equipment. CTL (Constructive Total Loss) in hull insurance is a term used in marine policy to describe a situation where the cost of repairing a damaged vessel exceeds its insured value or its market value. In such cases, the insurer may declare the vessel a total loss, and pay the policyholder the insured value of the vessel, less any deductible.

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CTL in Marine Insurance

  • The Constructive total loss in marine insurance policies is an important provision that protects ship-owners from financial losses that could result from accidents, piracy, or other perils. This clause enables the insurer to avoid the cost of expensive repairs and salvage operations. The insurer would have to pay the policyholder the insured value of the vessel.
  • Under a Constructive total loss in marine insurance policy, the insured value of the vessel is determined by the market value of the vessel at the time of the loss, or the agreed value between the insurer and the policyholder. If the cost of repairing the vessel exceeds its insured value, the insurer may declare the vessel a total loss, and pay the policyholder the insured value, less any deductible. The policyholder then transfers ownership of the damaged vessel to the insurer.
  • The Constructive total loss in marine insurance clause is unique. It allows the insurer to take ownership of the damaged vessel after paying the policyholder the insured value. This provision ensures that the insurer can recover some of its costs by selling the damaged vessel to salvage yards or scrap dealers. The insurer may also choose to repair the vessel and sell it as a rebuilt vessel.

Case Study


Marine hull insurance policies cover the loss or damage to a vessel or its equipment. One type of marine hull insurance policy is the constructive total loss (CTL) policy. A Constructive total loss in marine insurance policy is a marine hull insurance policy that is designed to protect the owner of a vessel in the event of a total loss.

Brief Facts

Mr. X is the owner of a fishing vessel which is used for fishing purposes. One day, while Mr. X was out fishing, his vessel was hit by a rogue wave, causing it to capsize. Mr. X and his crew were able to abandon the vessel safely, but the vessel was lost at sea.

Mr. X had a marine hull insurance policy that included a CTL policy. The CTL policy provided coverage for the loss of the vessel if it was deemed a constructive total loss. A CTL is deemed to have occurred when the cost of repairing the vessel exceeds its insured value.

Mr. X contacted his insurance company to report the loss of his vessel. The insurance company sent out an adjuster to assess the damage to the vessel. The adjuster determined that the vessel was indeed a constructive total loss, as the cost of repairing the vessel would have exceeded its insured value.


Under the terms of Mr. X's CTL policy, the insurance company agreed to pay him the insured value of his vessel. It allowed Mr. X to purchase a new vessel and continue his fishing business without suffering a significant financial loss.


The CTL clause in marine hull insurance policies provides protection to ship-owners against financial losses resulting from accidents or other perils. The provision enables insurers to avoid the cost of expensive repairs and salvage operations, and instead pay the policyholder the insured value of the vessel. The unique features of Constructive total loss in marine insurance policies, including the ability of the insurer to take ownership of the damaged vessel, make them an important tool for managing risk in the marine industry.

Written By: PolicyBazaar - Updated: 01 April 2023
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Policybazaar for Business - Marine Insurance - Customer Reviews
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3.8 April 20, 2023
Great Experience
I recently purchased Marine insurance from Policybazaar for my shipping business and I must say I am thoroughly impressed with their service and coverage. From start to finish, the experience has been smooth and hassle-free.Thankyou.
4.3 April 03, 2023
Provides Comprehensive Protection
When it comes to coverage, Marine insurance that i bought from PolicyBazaar has exceeded my expectations. It provides comprehensive protection for my cargo and vessels during transit, ensuring I can focus on my business operations with peace of mind. Thankyou.
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3.8 February 10, 2023
Exceeds Expectations
I recently had the pleasure of purchsing marine insurance from Policy bazaar website and I must say it has been an outstnding experience from start to finish. I am thrilled to share my positive customer review, as this truly exceeded my expectations. Thanks PB.
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4.3 January 11, 2023
Sanjeev Rathor
Efficient Process
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3.8 January 01, 2023
Comprehensive Coverage
I must mention the comprehensive coverage provided by the marine insurance policy I purchasd through Policy bazaar. It offered me the necesary protection and peace of mind. Thankyou PolicyBazaar.