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Simple English definitions for legal terms
actual total loss
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A quick definition of actual total loss:
Actual total loss is when something is completely destroyed or lost, and there is no way to get it back. This can happen to things like boats or houses that are insured. The insurance company will pay for the loss if it is covered by the policy. It is different from a partial loss, where only part of something is damaged or lost.
A more thorough explanation:
Definition: Actual total loss refers to the complete destruction or loss of value of an insured property, for which the insurer becomes liable. It can also refer to the failure to maintain possession of a thing.
Examples:
- If a ship sinks or is irreparably damaged beyond recovery, it is considered an actual total loss in marine insurance.
- If a car is completely destroyed in an accident, it is an actual total loss for the owner.
- If a person loses their house due to a natural disaster, it is an actual total loss for them.
These examples illustrate how actual total loss occurs when the insured property is completely destroyed or lost, and the insurer becomes liable for the financial detriment caused by the loss.