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
request by an insured for indemnification by an insurance company for loss incurred from an insured peril. ...
Form of state rating legislation that allows each property/liability insurer to choose between using rates set by a bureau or its own rates. Individual states regulate insurers and approve ...
1890 law prohibiting monopolies and restraint of trade in interstate commerce. The Sherman Act was strengthened in 1914 with amendments known as the Clayton Act that added further ...
Premiums paid with funds that are not borrowed from life insurance. It is important to ascertain the finance charges and the costs/benefits of such a transaction. ...
Arrangement, often funded by life insurance, to continue an employee's salary in the form of payments to a beneficiary for a certain period after the employee's death. The employer itself ...
Termination of a plan. Under federal tax law, a plan can only be terminated for reasons of business necessity. Otherwise, prior employer tax deductible contributions under the plan are ...
Amount of insurance remaining on a ceding company's books, net of the amount reinsured. ...
Actuarial procedure used to determine the annual rate of return at which annual benefits would have to be gained from the cash value life insurance policy in order to equal the annual ...
Maintenance of Social Security benefits at current dollar or percentage levels. Social Security benefits are indexed to the Consumer Price Index and rise in tandem with the Index. A benefit ...
Have a question or comment?
We're here to help.