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
Method of underwriting by which one or a group of Lloyd's underwriters write business on behalf of a number of Lloyd's syndicates and other insurance companies. Among the benefits of ...
Membership organization representing professional actuaries in all insurance fields in Canada including life and health, casualty, consulting and fraternal actuaries. A member must reside ...
Deliberate act or omission, including trespass, assault and battery, invasion of privacy, libel, and slander. An intentional tort is a branch of civil liability. Liability insurance can be ...
Sums payable to the winning plaintiff by the losing defendant in a court of law; can take any or all of these forms: general, punitive, and special. ...
Latin phrase meaning "beyond power or authority" describing an act by a corporation that exceeds its legal powers. For example, corporations do not have the authority to engage in the ...
Federal law requiring that all pension plan trustees and anyone else who handles pension funds must obtain a fidelity bond. This bond covers the plan in the event of embezzlement and theft. ...
Amount borrowed against the cash value of a life insurance policy to pay the premium due. ...
System established for checking claims to determine whether they should be paid immediately or checked further for validity. ...
Investment risk associated with the relationship between the yield (interest, dividends, and capital) of financial instruments and the rate of inflation in the economy. For fixed income ...
Have a question or comment?
We're here to help.