SUE AND LABOUR

SUE AND LABOUR A clause provision found in certain policies, particularly: Marine Insurance: Traditionally, this clause originated in marine insurance policies and Property Insurance: It's also increasingly present in some property insurance contracts, including builder's risk and difference in conditions (DIC) forms. The purpose of this clause is to incentivizes the insured party (policyholder) to take reasonable steps to prevent a loss or minimize the extent of damage that has already occurred. The insured has the responsibility to take necessary actions to safeguard the insured property. This could involve: -Taking measures to prevent further damage after an incident (e.g., covering a broken roof with a tarp). -Hiring professionals to mitigate potential losses (e.g., salvaging water-damaged belongings). On the other hand the Insurer has the obligation to adhere to reimbursement: The insurance company agrees to reimburse the insured for reasonable expenses incurred in taking these preventive or mitigating actions. They do not include expenses incurred in general average or salvage acts; these being recoverable under the policy only as part of the Underwriters’ liability for contribution to general average or salvage, if any. Sue and labor charges are recoverable under a policy that incorporates a sue and labor clause (SG policy), or in accordance with the wording of the policy (e.g. under the “duty of the Assured” clause attached to a MAR policy). Example: Imagine a fire partially damages a building insured under a policy with a "Sue and Labor" clause. The insured promptly calls the fire department and hires a company to board up the damaged section to prevent further water damage from rain. The reasonable costs incurred for these actions would be covered by the insurer under the "Sue and Labor" provision. Not all insurance policies explicitly contain a "Sue and Labor" clause. It's crucial to review your specific policy wording to determine if such a provision exists. The clause typically applies to expenses incurred to prevent further loss arising from a covered peril (event insured against) in the policy. #BeNewinsurance #InsurTech #inclusiveinsurance #insurance #reinsurance #takaful