Property insurance policies often include a clause stating the insured cannot dump damaged property on the insurer and demand its full value. This is known as ...

• A. Abandonment
• B. Severability
• C. Proximate Cause
• D. Direct Loss

Answer: (A)

The concept being tested is abandonment in property insurance. An abandonment clause stops the insured from turning over damaged property to the insurer and demanding payment of its full replacement value. Instead, the insurer’s payout is limited to the policy terms (often actual cash value or replacement cost, subject to deductibles and limits), and salvage rights may come into play. This rule encourages proper mitigation and prevents double recovery by dumping damaged property on the insurer for the full amount.

Severability deals with how the contract treats multiple insured interests independently, not with surrendering property. Proximate cause concerns determining the chain of events that led to the loss. Direct loss refers to the actual physical damage suffered.