Abandonment Clause
Definition of "Abandonment clause"
In marine insurance, clause giving an insured the right to abandon lost or damaged property and still claim full settlement from an insurer (subject to certain restrictions). Two types of losses are provided for under abandonment clauses:
- Actual total lossproperty so badly damaged it is unrepairable or unrecoverable; causes include fire, sinking, windstorm damage, and mysterious disappearance. For example, until the 1980s the Titanic, which sank off Newfoundland in 1912, was deemed to be unrecoverable and the Commercial Union Insurance Company had paid its owners for their loss due to sinking. Owners of ships that mysteriously disappeared in the Bermuda Triangle have been able to collect insurance proceeds. Disappearance of pleasure craft due to drug pirates has resulted in indemnification of owners through insurance proceeds.
- Constructive total lossproperty so badly damaged that the cost of its rehabilitation would be more than its restored value. For example, a ship and/or its cargo is damaged to such a degree that the cost of repair would exceed its restored value. The insured can abandon the property if (a) repair costs are greater than 50% of the value of the property after it has been repaired and (b) the insurance company agrees to the insured's intent to abandon.
Popular Insurance Terms
Provision used to avoid duplication of coverage in other policies; to eliminate coverage for property under the care, custody, and control of an insured business; as well as to avoid ...
Action by insurance companies and agents to voluntarily refrain from business conduct that is misleading, fraudulent, and in general would have adverse consequences for the purchaser of the ...
Same as term Master policy: single contract coverage on a group basis issued to an employer. Group members receive certificates as evidence of membership summarizing benefits provided. ...
Coverage of the hull of a ship and its tackle, passenger fittings, equipment, stores, boats, and ordnance. Coverage is provided under the following types of policies: builders risk hull ...
Separate trust established by a charitable entity whose purpose is to receive contributions from numerous donors. All the donors' contributions are commingled. Each donor can retain a ...
Phrase used to describe a method of annuity payout that guarantees a specified number of years, regardless of whether an annuitant remains alive. ...
Process used to determine the amount of life insurance required on the life of the prospective insured. The process involves an analysis of the prospective insured's current financial ...
Form of cash refund annuity used by contributory pension or employee benefit plans. When employee participants die before receiving all of their contributions in the form of retirement ...
Federal agency that researches injury and illness arising from workplace hazards and recommends standards for maximum exposures to hazardous substances. ...
Have a question or comment?
We're here to help.