Actual Total Loss means when the subject matter is destroyed or so damaged as to cease to be the thing of the kind insured or the assured is irretrievably deprived of the subject matter insured.
When a ship concerned is missing and after a lapse of a reasonable time, no news of her has been received, an actual total loss can be presumed. An actual total loss can occur in four ways:
- where property insured is actually destroyed e.g. a ship is wrecked or burnt out or where the goods are totally crushed in the collapse of a stow of cargo;
- where goods change their character in such a manner that they are no more the thing of the kind that was insured;
- where the assured is irretrievably deprived of his property i.e. the ship is sunk in deep waters;
- where the insured property is reported as missing in the Lloyd’s e.g. where a ship has not reported for several weeks.