Abandonment Clause

What is ‘Abandonment Clause’

A clause in a property insurance contract that, under certain circumstances, permits the property owner to abandon lost or damaged property and still claim a full settlement amount. If the insured party’s property cannot be recovered, or the cost to recover or repair it is more than its total value, it can be abandoned and the insured party is entitled to a full settlement amount.

Explaining ‘Abandonment Clause’

This type of insurance clause typically comes into play with marine property insurance, such as boats or watercraft. If a property owner’s ship is sunk or lost at sea, the abandonment clause affords the owner the right to essentially “give up” on finding or recovering his or her property and subsequently collect a full insurance settlement from the insurer.

Further Reading

  • Anchor, float or abandon ship: exchange rate regimes for accession countries – papers.ssrn.com [PDF]
  • The determinants of abandoned M&As in the banking sector – papers.ssrn.com [PDF]
  • Rehabilitation of abandoned housing projects: A comparative analysis between the law and practice in Peninsular Malaysia and the Republic of Singapore – www.tandfonline.com [PDF]
  • Risk allocation and flexibility in acquisitions: The economic impact of material-adverse-change (MACs) clauses – papers.ssrn.com [PDF]
  • State Control in International Trade and Finance – www.jstor.org [PDF]
  • Abandonment, entrapment, and neoclassical realism in Asia: the United States, Japan, and Korea – academic.oup.com [PDF]
  • Real options methodology in public-private partnership projects valuation – www.doiserbia.nb.rs [PDF]