What does the sue and labor clause in an insurance policy allow the policyholder to do?

The sue and labor clause in an insurance policy is intended to encourage policyholders to take reasonable steps to mitigate loss or damage after a covered event. This clause supports the concept of loss prevention by allowing policyholders to take necessary and reasonable actions to protect their property from further damage. For instance, if a policyholder suffers a water leak, the sue and labor clause may allow them to make temporary repairs to prevent additional water damage, while ensuring that the costs incurred for these immediate actions can be reimbursed under their insurance coverage.

This focus on proactive loss prevention is vital in insurance because it can ultimately reduce the overall costs of claims for insurers, while also helping the policyholder avoid more severe damage and greater expenses. By encouraging such actions, the sue and labor clause aligns both the insurer’s interest in minimizing claims costs and the policyholder’s need to safeguard their assets effectively.