Constructive Total Loss

Published:

Definition - What does Constructive Total Loss mean?

Constructive total loss refers to damage to property that is calculated to be greater than the insurance limit when reviewing restoration or repair as options. It might even be assessed that the cost of restoration or repair can exceed the value of the property.

Insuranceopedia explains Constructive Total Loss

For example, a house is damaged by fire and when insurance investigators come in, they assess the situation in light of eventual claims and find out that the materials needed to repair the damage or restore the property are currently priced that they exceed the insurance limit.

An example can also be seen in auto insurance. If a car is in an accident and the damage is such that it might cost more than buying a new one, it may be deemed a constructive total loss. Predictably, the damage is more than what the insurance can cover.


How Well Do You Know Your Life Insurance?

The more you know about life insurance, the better prepared you are to find the best coverage for you.

Whether you're just starting to look into life insurance coverage or you've carried a policy for years, there's always something to learn.

Share this:

Connect with us

Email Newsletter

Join thousands receiving the latest content and insights on the insurance industry.