Abandonment Clause

An abandonment clause allows individuals to get a full insurance settlement by abandoning lost or damaged property. For instance, Bob buys a boat where he plans to hold square dance parties on Lake Tukituki. Before he sets off on his do-si-do extravaganza, the boat is assailed by crawdad pirates, who strip it of useful instruments, and leave it at an unknown latitude at the bottom of the lake.

Bob realizes the cost of recovering and salvaging the boat far exceeds the boat’s value, so he takes a specific action that indicates he is abandoning the property and will no longer claim ownership. Bob, therefore, can receive a settlement from the insurance company for the full amount of the property, assuming that's what the contract says.