Claims
Actual versus constructive total loss
| Term | What it means in practice |
|---|---|
| Actual total loss | The vessel is destroyed, sunk beyond recovery or wholly lost |
| Constructive total loss | Repair is possible but uneconomic relative to the insured value |
| Arranged total loss | Insurer and owner agree to settle as a total loss |
Agreed value versus market value settlements
Deductions from a total loss settlement
- The excess, or several excesses where the wording allows them to stack
- Any unpaid premium for the policy period
- Salvage value, where the insurer does not take the wreck
- Amounts paid direct to a financier whose interest is noted
- Costs the policy does not cover, such as loss of use or personal effects beyond the sub-limit
Wreck ownership after settlement
On payment of a total loss the insurer ordinarily takes title to what remains. If you want to keep the vessel — for restoration, or for parts — that must be negotiated, and the salvage value will be deducted from the settlement. Be clear about which you want early, because it changes the arithmetic.
Wreck-removal responsibilities
A total loss settlement pays for the boat. It does not automatically deal with the obligation to remove a wreck from a waterway, berth or reef, which can be substantial and is often a liability rather than a hull matter. Check where that limit sits.
Read the wording before you need it
Almost every disputed marine claim turns on a definition, an exclusion or a condition the owner had never read. The PDS guide explains which sections decide claims.
Frequently asked questions
What is a constructive total loss on a boat?
It is where repair is physically possible but uneconomic compared with the insured value. The threshold varies by policy, so the wording rather than a general rule determines when it applies.
Do I keep the boat after a total loss payout?
Normally the insurer takes the wreck on settlement. Retaining it is usually possible by agreement, with the salvage value deducted from what you are paid.
Related guides
- Agreed Value vs Market Value Boat Insurance
- Boat Insurance Sum Insured: Choosing Your Vessel Value
- Salvage and Wreck Removal Insurance
- Financed Boat Insurance Australia
- Insurance Complaints and AFCA for Boat Owners
- Boat Insurance Excesses Explained
- Boat Insurance Claims Australia: Incidents and Disputes