Legal Definitions - marine rule

The marine rule is a legal principle used to determine when damaged property should be considered a complete loss rather than repaired. It establishes that if the estimated cost to restore damaged property would exceed more than half (50%) of its value *before* the damage occurred, the property is legally "deemed to be totally destroyed." This means it is treated as if it were completely ruined, even if some parts remain intact.

While this rule originated in maritime law, specifically for assessing damage to ships and applying marine insurance, it has since been applied to various other types of property, including buildings, vehicles, and specialized equipment.

• Example 1: A Vintage Car Collection

  Imagine a meticulously restored vintage sports car, valued at $300,000, is involved in a severe accident. Due to the rarity of parts and the specialized craftsmanship required for its restoration to original condition, the estimated repair costs are quoted at $180,000. Since $180,000 is more than half of the car's pre-accident value ($300,000 / 2 = $150,000), the marine rule would classify this vehicle as a total loss. This means the owner would likely receive compensation for the full value of the car before the damage, rather than having it repaired.

• Example 2: A Small Business Property

  Consider a historic storefront building housing a boutique, valued at $600,000. A sudden, severe storm causes extensive structural damage, including a collapsed roof and significant water infiltration. Engineers estimate that the cost to fully repair the building, bring it up to current codes, and restore its historical elements would be $350,000. Because $350,000 exceeds half of the building's pre-storm value ($600,000 / 2 = $300,000), the marine rule would deem the property a total destruction. The insurance company would likely pay out for a total loss, rather than funding the extensive repairs.

• Example 3: Specialized Industrial Equipment

  A manufacturing company owns a highly specialized, custom-built robotic assembly line, valued at $2,000,000. A critical malfunction causes widespread damage to its intricate internal components and control systems. Experts determine that the cost to replace the damaged parts, recalibrate the entire system, and ensure its full functionality would be $1,100,000. As $1,100,000 is greater than half of the equipment's original value ($2,000,000 / 2 = $1,000,000), the marine rule would apply, classifying the robotic assembly line as a total loss. This would guide the company's decision to replace the system entirely rather than attempt a costly repair.