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Home / Insurance / A Warning to Hurricane Ian Policyholders on Loss Mitigation vs. Loss Prevention – Analysis of a Suit and Work Clause Can an insured be reimbursed for costs of preventing a loss under a property insurance policy? If an injury occurs, can an insured be reimbursed for the costs of reducing or mitigating damage from further injury? The answer is to read the full policy terms to make this decision. Generally, property insurance policies have terms that follow maritime and inland marine forms that require the policyholder to take steps to reduce or mitigate a past loss and usually pay costs to do so. It is much less likely that an insurance policy will fully reimburse the costs of preventing a loss from occurring – but read the policy carefully. This issue involving a lawsuit and working conditions was discussed by the Florida Supreme Court. Following earlier case precedents interpreting the suit clause and the terms of employment, the court explained that: “An insured has the duty to exercise the care of a prudent, uninsured owner to protect insured property so as to minimize or prevent the loss to which the insurer would be liable. The purpose of the suit clause is to reimburse the insured for the expenses incurred primarily for the benefit of the insurer to reduce or eliminate a covered loss.” Has the lawsuit and labor also paid for costs to prevent a loss? Not in that policy: “…Zurich correctly argues that the Sue and Labor clause of the Swire-Zurich policy is specifically applicable only after an actual loss has occurred or is occurring. Because Swire acted to prevent a potential collapse of the building , and no actual loss had occurred, the $4.5 million spent by Swire is not recoverable under the policy’s Sue and Labor clause. …the policy’s Sue and Labor clause applies only in the case of an actual covered loss. Any other conclusion would result in the Sue and Labor clause becoming the primary coverage provision of this contract without regard to the content of the contract or the coverage it was intended to provide.The reasoning suggested by Swire is certainly logical, that the preventive measures may have conferred a benefit on the insurer .If the Sue and Labor clause had been drafted differently or if it had included language about preventing loss, the conclusion might have been a other.” Hurricane Ian victims should be aware of property insurance provisions that require a policyholder to repair and take steps to prevent further loss or damage. With Hurricane Nicole soon to hit Florida, these provisions are important information. Policies can also provide benefits for taking these emergency and temporary repairs before the winds and rain from Hurricane Nicole cause further damage Thought for the Day “You can never protect yourself 100%. What you are doing is protecting yourself as much as possible and reducing the risks to an acceptable degree. You can never eliminate all risk.” Kevin Mitnick | Property Insurance Law Blog

A Warning to Hurricane Ian Policyholders on Loss Mitigation vs. Loss Prevention – Analysis of a Suit and Work Clause Can an insured be reimbursed for costs of preventing a loss under a property insurance policy? If an injury occurs, can an insured be reimbursed for the costs of reducing or mitigating damage from further injury? The answer is to read the full policy terms to make this decision. Generally, property insurance policies have terms that follow maritime and inland marine forms that require the policyholder to take steps to reduce or mitigate a past loss and usually pay costs to do so. It is much less likely that an insurance policy will fully reimburse the costs of preventing a loss from occurring – but read the policy carefully. This issue involving a lawsuit and working conditions was discussed by the Florida Supreme Court. Following earlier case precedents interpreting the suit clause and the terms of employment, the court explained that: “An insured has the duty to exercise the care of a prudent, uninsured owner to protect insured property so as to minimize or prevent the loss to which the insurer would be liable. The purpose of the suit clause is to reimburse the insured for the expenses incurred primarily for the benefit of the insurer to reduce or eliminate a covered loss.” Has the lawsuit and labor also paid for costs to prevent a loss? Not in that policy: “…Zurich correctly argues that the Sue and Labor clause of the Swire-Zurich policy is specifically applicable only after an actual loss has occurred or is occurring. Because Swire acted to prevent a potential collapse of the building , and no actual loss had occurred, the $4.5 million spent by Swire is not recoverable under the policy’s Sue and Labor clause. …the policy’s Sue and Labor clause applies only in the case of an actual covered loss. Any other conclusion would result in the Sue and Labor clause becoming the primary coverage provision of this contract without regard to the content of the contract or the coverage it was intended to provide.The reasoning suggested by Swire is certainly logical, that the preventive measures may have conferred a benefit on the insurer .If the Sue and Labor clause had been drafted differently or if it had included language about preventing loss, the conclusion might have been a other.” Hurricane Ian victims should be aware of property insurance provisions that require a policyholder to repair and take steps to prevent further loss or damage. With Hurricane Nicole soon to hit Florida, these provisions are important information. Policies can also provide benefits for taking these emergency and temporary repairs before the winds and rain from Hurricane Nicole cause further damage Thought for the Day “You can never protect yourself 100%. What you are doing is protecting yourself as much as possible and reducing the risks to an acceptable degree. You can never eliminate all risk.” Kevin Mitnick | Property Insurance Law Blog





A Warning to Hurricane Ian Policyholders on Loss Mitigation vs. Loss Prevention – Analysis of a Suit and Work Clause Can an insured be reimbursed for costs of preventing a loss under a property insurance policy? If an injury occurs, can an insured be reimbursed for the costs of reducing or mitigating damage from further injury? The answer is to read the full policy terms to make this decision. Generally, property insurance policies have terms that follow maritime and inland marine forms that require the policyholder to take steps to reduce or mitigate a past loss and usually pay costs to do so. It is much less likely that an insurance policy will fully reimburse the costs of preventing a loss from occurring – but read the policy carefully. This issue involving a lawsuit and working conditions was discussed by the Florida Supreme Court. Following earlier case precedents interpreting the suit clause and the terms of employment, the court explained that: “An insured has the duty to exercise the care of a prudent, uninsured owner to protect insured property so as to minimize or prevent the loss to which the insurer would be liable. The purpose of the suit clause is to reimburse the insured for the expenses incurred primarily for the benefit of the insurer to reduce or eliminate a covered loss.”<div class="e3lan e3lan-in-post1"></div>; Has the lawsuit and labor also paid for costs to prevent a loss? Not in that policy: “…Zurich correctly argues that the Sue and Labor clause of the Swire-Zurich policy is specifically applicable only after an actual loss has occurred or is occurring. Because Swire acted to prevent a potential collapse of the building , and no actual loss had occurred, the $4.5 million spent by Swire is not recoverable under the policy’s Sue and Labor clause. …the policy’s Sue and Labor clause applies only in the case of an actual covered loss. Any other conclusion would result in the Sue and Labor clause becoming the primary coverage provision of this contract without regard to the content of the contract or the coverage it was intended to provide.The reasoning suggested by Swire is certainly logical, that the preventive measures may have conferred a benefit on the insurer .If the Sue and Labor clause had been drafted differently or if it had included language about preventing loss, the conclusion might have been a other.” Hurricane Ian victims should be aware of property insurance provisions that require a policyholder to repair and take steps to prevent further loss or damage. With Hurricane Nicole soon to hit Florida, these provisions are important information. Policies can also provide benefits for taking these emergency and temporary repairs before the winds and rain from Hurricane Nicole cause further damage Thought for the Day “You can never protect yourself 100%. What you are doing is protecting yourself as much as possible and reducing the risks to an acceptable degree. You can never eliminate all risk.” Kevin Mitnick | Property Insurance Law Blog | Merlin Law Group


















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