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
coverage for contingent liability exposure. ...
Written contract between an insured and an insurance company stating the obligations and responsibilities of each party. ...
Proceeds from a life insurance policy paid on a monthly basis instead of in a lump sum. ...
Coverage for the inside of an insured premises of a business firm if it experiences a loss of money, securities, personal property, and damage or destruction of real or personal property ...
Fund that concentrates primarily on short-term government securities, certificates of deposit with maturities less than one year, and high-quality interest-bearing corporate debt. The fund ...
Interest earned but not yet paid for a period of time that has elapsed since the last interest payment. ...
Approach that reflects losses expected. It is a calculation of the pure cost of property or liability insurance protection without loadings for the insurance company's expenses, premium ...
Program of health care designed for the prevention and/or reduction of illnesses by providing such services as regular physical examinations. This care is in opposition to curative care, ...
Figure in a mortality table derived by dividing the number of people alive at the end of a given year by the number of people alive at the beginning of that same year. ...
Have a question or comment?
We're here to help.