What happens if an insured does not comply with a sue and labor clause?

If an insured does not comply with a sue and labor clause, they may not receive full compensation for their loss. A sue and labor clause is a provision in an insurance policy that obligates the insured to take reasonable steps to protect the insured property from further damage after a loss occurs. This means that the insured has a duty to mitigate damages by acting promptly and taking necessary actions to prevent additional losses.

Failure to comply with this requirement may result in a reduction of the amount payable under the policy. Insurers want to ensure that policyholders do everything they can to minimize the financial impact of damage before the claim is settled. If the insured neglects this responsibility, it can jeopardize their claim and may lead to a situation where they receive less compensation than they would have had they adhered to the requirements set forth in the policy.