Compromised Total Loss Law and Legal Definition

Total loss of an entire vessel or an entire cargo shipment occur when the property is completely lost or destroyed due to physical destruction by fire, etc, irretrievable deprivation, loss of specie, or loss of vessel by missing. Compromised or arranged total loss is a negotiated total loss settlement between the property owner and the insurance company under unusual circumstances. For instance, a situation where a vessel owner accepts a settlement of less than the face value of the hull policy and retains title to the vessel is a compromised total loss. It is in the nature of an arranged settlement on a hull policy where there is not claim for actual or constructive total loss, but where it is impractical to repair the vessel.