"The assured may claim compensation for a total loss if the vessel is lost without there being any prospect of it being recovered or if the vessel is so badly damaged that it cannot be repaire." Clause 11-1. Total loss, Nordic Plan

A total loss could leave the shipowner in a position where the hull value would be inadequate to cover the costs and expenses necessary to replace the lost vessel or ordering a new vessel. The Hull Interest cover allows the shipowner to have an expectation of returning to status quo in the event of a total loss, even taking into consideration the total capital value of the ship.