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
Documents completed by the agent to effect authorization to act on behalf of the company. ...
Same as term Credit Card Insurance: coverage under a homeowners insurance policy in the event that a credit card is fraudulently used or altered. Fraud includes theft and the unauthorized ...
Provision in an insurance policy that indicates what is denied coverage. For example, common exclusions are: hazards deemed so catastrophic in nature that they are uninsurable, such as war; ...
Insurance policy, particularly property and liability insurance, which the owner cannot assign to a third party. ...
Condition of real or personal property when it is damaged or destroyed to such an extent that it cannot be rebuilt or repaired to equal its condition prior to the loss. ...
An exception to section 101 (a) (1) OF THE INTERNAL REVENUE CODE tax-exempt Status Of the DEATH BENEFIT in a life insurance policy where the transfer of the interest in the policy by the ...
a large number of homogeneous exposures (in order for the deviation of actual losses from expected losses to approach zero, and thecreditability of the prediction to approach one). loss ...
Organization that calculates rates and develops insurance policies for its property and casualty member companies. The suggested rates are used by smaller companies where the loss ...
Arrangement between the buyer and the seller in which there is a mutual agreement to buy or sell a security at a given price at a stipulated future date. These contracts are effected on a ...
Have a question or comment?
We're here to help.