Abandonment of Insurance

In law, abandonment is the relinquishment, giving up or renunciation of an interest, claim, civil proceedings, appeal, privilege, possession, or right, especially with the intent of never again resuming or reasserting it. Such intentional action may take the form of a discontinuance or a waiver. This broad meaning has a number of applications in different branches of law. In common law jurisdictions, both common law abandonment and statutory abandonment of property may be recognized.

Abandonment occurs when the insured surrenders to the insurer all rights to damaged or lost property and claims payment for a total loss. Sometimes, this is permitted only when damage constitutes constructive total loss. In marine insurance parlance, abandonment involves the surrender of a ship or goods to the insurer, who becomes the abandonee. Abandonment can also mean refusal to accept from a delivering carrier a shipment so damaged in transit as to be worthless.

Abandonment is the act of surrendering a claim to, or interest in, a particular asset. In securities, abandonment is the permitted withdrawal from a forward contract that is made for the purchase of deliverable securities. In many instances, an option may not be worthwhile or profitable to exercise, so the purchaser of the option lets it expire without being exercised.

In other hand, abandonment can be a clause in property insurance policies prohibiting the insured from abandoning damaged property to the insurer for repair or disposal. Arranging for repair or disposal is the insured's responsibility, unless the insurer elects otherwise.