Abandonment

Abandonment is an important doctrine in marine insurance. It refers to the act by which, when a constructive total loss of the insured subject matter occurs, the insured transfers all rights to the insured subject matter to the insurer and claims compensation for the full insured amount. Usage scenarios: It mainly applies in marine insurance fields such as cargo transportation insurance and hull insurance. When goods or a ship suffer a constructive total loss due to insured perils (for example, the goods have not been completely destroyed but the repair cost exceeds their value, or the ship is missing), the insured may choose abandonment. Precautions: Abandonment becomes effective only with the insurer's consent, and the insurer has the right to refuse acceptance; abandonment must not be subject to conditions and must cover the entire insured subject matter; the insured should issue a notice of abandonment within a reasonable time, otherwise the right may be lost. Distinction from other terms: Abandonment differs from actual total loss, which is the complete destruction of the subject matter, whereas abandonment addresses constructive total loss; it also differs from subrogation, which is the insurer's right to recover from third parties after payment, whereas abandonment is the insured's voluntary transfer of rights to the subject matter in exchange for a total loss indemnity.