A D J U S T I N G T O D A Y ADJUSTING TODAY is published as a public service by Adjusters International, Inc. It is provided for general information and is not intended to replace professional insurance, legal or financial advice for specific cases. AT13 3043 Mr. Malecki is a principal of Malecki Deimling Nielander & Associates, LLC, an insurance and risk management firm. He began his career over 50 years ago and has held the titles of insurance underwriter, broker, insurance company claims consultant, archivist, historian and teacher. Donald S. Malecki, CPCU Adjusting Today on the Web — www.AdjustingToday.com View our entire catalog of back issues; download PDF versions, subscribe and contact the editor CORPORATE OFF ICE 126 Business Park Drive Utica, New York 13502 800.382.2468 Outside U.S. (315) 797.3035 FAX: (315) 272.2054 Editor@AdjustingToday.com WEB ADDRESSES www.AdjustersInternational.com www.AdjustingToday.com PUBL ISHER Ronald A. Cuccaro, SPPA EDI TOR Sheila E. Salvatore Copyright © 2013 Adjusters International, Inc. Adjusters International ® and the AI logo are registered trademarks of Adjusters International, Inc. Follow Adjusting Today on Facebook & Twitter: Facebook.com/AdjustersInternational Twitter.com/AdjustingToday ____________________ 1 Transportation Coverage Form, AAIS IM 7250 0404, Copyright American Association of Insurance Services, 2004. 2 Building and Personal Property Coverage Form, CP 00 10 06 07, Copyright, ISO Properties, Inc., 2007. 3 “Allocation of the Costs of Preventing An Insured Loss,” Columbia Law Review, Vol. 71:1309, p.1311. 4 Columbia Law Review, p. 1312. This wording was said to be the extent of the original sue and labor clause. Its purpose was said “to permit the insured to use every possible opportunity he had to preserve the cargo and hull without waiving his right to tender abandonment and claim a total loss.” 5 This part of the sue and labor clause was said in this Law Review to have been added sometime before the year 1783. 6 This waiver in the above treatise was said to have been added after the decision in Peele v. Merchants’ Ins. Co., 19 F. Cas. 98 (C.C.D. Mass. 1822). 7 Alex L. Parks, The Law and Practice of Marine Insurance and Average, Vol. I, p. 632, Cornell Maritime Press, Centreville, Md. 1987. • Several different versions of the sue and labor clause are used with nonstandard property policies, such as difference in conditions, builders risk, and protection and indemnity forms. Its first use was with maritime exposures. • The primary purpose for a sue and labor clause is for the benefit of the insurer, even though the insured benefits from being reimbursed for costs and expenses incurred in reducing or eliminating loss. • The sue and labor clause is not a separate insuring agreement. It is a condition, even though this point is litigated on occasion. • When a sue and labor clause applies to both imminent and actual loss, the imminent loss must be one where there is no question about being covered. Also, with time being of the essence in the wake of a loss, insureds should not automatically assume that all expenses and costs incurred to reduce or avoid loss will be covered. • The sue and labor clause, to the extent it is otherwise applicable, only applies to a covered cause of loss. Although there may be situations where insureds still obtain coverage based on the facts and how they are pled, the consensus of the court cases appears to be that the sue and labor clause will not apply to losses that are not covered, such as error in design or faulty workmanship.
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