UK Accounting Glossary
The act of abandoning something or someone. Abandonment is when an owner gives up all rights to an asset. This term can be used to describe the voluntary non-renewal of a patent or trademark, or the loss of rights to an asset when the owner can no longer be found.
This refers to 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.
This often occurs in Marine Insurance is a vessel has run aground in treacherous waters and the cost of the recovering said vessel would be greater than the cost of the vessel and all its cargo.
Abandonment is a viable option in such an instance as it’s simply not financially viable to try and recover the vessel.
Abandonment also occurs during Wartime; when a vessel is captured by the enemy.
If the owner wishes to declare a vessel (including its cargo) a total loss, then a notice of abandonment is given to the Insurer.
If subsequently, the vessel and/or its cargo are recovered at a later date, they then become the property of the insurer.
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This glossary post was last updated: 13th August 2019.