Abandonment in Marine Insurance

(A comparative study)

Abstract

This study examines the Abandonment System in Marine Insurance, a distinctive feature that sets marine insurance apart from other types of insurance. Through this system, the insured may abandon the insured property to the insurer in exchange for receiving full compensation, provided that serious damage or a major maritime disaster has occurred. The exercise of this right, however, is subject to the insurer’s acceptance and the conditions stipulated by law.

The significance of this system lies in its ability to facilitate the settlement of claims in cases where a vessel is lost or no information about it is received, which constitutes constructive total loss. In such circumstances, the insured is entitled to receive the full amount of compensation without bearing the burden of proving the total loss of the insured property.

The study concludes that there is a legislative deficiency in the Saudi system, due to the absence of detailed provisions regulating abandonment in marine insurance, in addition to a clear inconsistency in limitation periods—two years under the Marine Insurance Law versus five years under the rules governing the Insurance Disputes and Violations Committees.

The study recommends the enactment of an independent Marine Insurance Law in both the Kingdom of Saudi Arabia and Sudan, with particular emphasis on including a separate chapter on abandonment within the Saudi Maritime Commercial Law or its executive regulations. It also calls for unifying the limitation period to five years from the date of claim maturity and encourages the publication of judicial rulings on insurance disputes to promote consistency in judicial practice in the absence of detailed legislation.