⚓ Total Loss vs Partial Loss in Marine Insurance: What You Need to Know

Table Of Content

• Introduction

Total Loss 

Actual Total Loss (ATL)

Constructive Total Loss (CTL)

Partial Loss

Particular Average

General Average

• Recent Scenario

• Comparison Table

• Why It Matters

Introduction

In marine insurance, claims fall into two main categories: total loss and partial loss. Knowing which applies to your situation is key when choosing coverage. This blog explains both types, offers a data snapshot ideal for an infographic, and guides you on protecting your shipments with BTW IMF’s expertise.

Understanding the difference between total loss vs partial marine insurance loss is essential for SME owners and logistics managers. This ensures your coverage reflects real-world risks—from completely lost cargo to damaged shipments—and helps avoid surprises when filing claims.

Total Loss

Your cargo or vessel experiences a total loss when it is completely destroyed or the cost to recover it is higher than its value.

Actual Total Loss (ATL):

This occurs when the goods are entirely destroyed or go missing. For instance, if a ship sinks or the cargo is completely burned.

Constructive Total Loss (CTL):

In this case, the cargo still exists, but recovering it is not financially sensible. For example, if retrieval costs are more than the shipment's value.

In both situations, the insurer pays the full insured value, and ownership of the cargo transfers to the insurer.

Partial Loss

A partial loss happens when only some of the shipment or vessel is damaged.

Particular Average:

This refers to unintentional damage covered by the policy, such as during handling or due to weather. It is specific to your cargo.

General Average:

This involves a voluntary sacrifice, like throwing cargo overboard to save a ship. It shares losses among stakeholders involved in the maritime voyage.

Recent Scenario :

• In 2023, 35% of marine insurance claims were for partial losses, such as damage from handling and delays.

  
  

• Total losses (ATL + CTL) made up 15%, involving severe incidents like sinkings or irreversible damage.

  
  

• General average events happen in around 5% of voyages, often due to storms causing cargo to be dumped.

  
  

• These numbers emphasize the importance of understanding the difference between total loss and partial marine insurance loss when tailoring your insurance needs.

  
  

Comparison Table

Criteria	Total Loss	Partial Loss
Damage Extent	Full destruction or irretrievable loss	Only part of the cargo/vessel affected
Types	ATL & CTL	Particular average & General average
Compensation	Full insured value	Proportional payout for damages
Ownership Transfer	Yes (to insurer)	No
Claims & Documentation	Notice of abandonment for CTL required	Detailed survey and invoices needed

Why It Matters

Policy selection: If your route is high-risk, such as areas prone to piracy, make sure CTL coverage is included under total loss or partial marine insurance loss scenarios.

Claims readiness: ATL/CTL requires an abandonment notice; partial losses need documented assessments.

Cost planning: Know when you will receive full value versus partial recovery to ensure better financial preparation.

Understanding total loss and partial marine insurance loss helps you choose the right coverage. It ensures you avoid surprises and secure your supply chain, whether facing major losses or minor damages.