What is an Abandonment Clause?
An abandonment clause is a provision in an insurance contract that ensures full compensation in the event of abandonment.
How Does an Abandonment Clause Work?
For example, suppose a company has an insurance policy on a machine, and the machine is damaged to such an extent that it is not worthwhile to pay for the repairs. The company may abandon the machine and collect on the insurance policy via the abandonment clause.
Why Does an Abandonment Clause Matter?
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