The act of giving up the ownership of something covered by an insurance policy and treating it as if it has been completely lost or destroyed. If the insurers agree to abandonment, they will pay a total-loss claim (see actual total loss; constructive total loss). This often occurs in marine insurance if a vessel has run aground in hazardous waters and the cost of recovering it would be higher than its total value and the value of its cargo. It also occurs during wartime when a vessel is captured by the enemy. If the owner wishes to declare a vessel and its cargo a total loss, notice of abandonment is given to the insurer; if, subsequently, the vessel or its cargo are recovered, they become the property of the insurer.
Subjects: Business and Management.