I often encounter situations where a client has suffered a property loss and wants to know if they are required to make repairs and mitigate damages prior to being paid by their carrier. In this situation the carrier has usually paid an insufficient amount towards repairing the loss or has not paid out any monies.

A kind of Catch-22 is put forward where the insured is often told that they should not do anything until an inspection has been completed if they want to fully recover their damages from the insurer, while at the same time they are told to mitigate or repair damages to the extent possible.

In general, property insurance policies will have a clause that requires the insured to mitigate damages in order to get coverage so it’s important to first and foremost look at the policy. This is a good practice for any situation involving an insurance contract. It’s always a good idea to read your insurance policy carefully, and more than once.

A policy exclusion will likely have language directing an insured to “use all reasonable means to save and preserve property at and after the time of loss.”1 This will generally create a contractual obligation on the part of the insured to mitigate damages.2 So you have to do what you can to try to repair or offset the damages prior to getting a recovery or risk being denied by your carrier. This duty can end up costing insureds additional money they didn’t expect they would have to spend in the event of a loss. Unfortunately, it’s the best alternative when it comes to getting compensated by your carrier for a property loss.

In New York, for example, an insured was forced to accept the cost of “moving and manipulating” covered property while the premises was being cleaned, repainted, and restored after a fire.3 The court reasoned that the subject provision requiring mitigation was not meant to provide additional insurance. The court concluded that the purpose of the provision was to impose a duty on the insured to attempt to prevent any additional loss and to demonstrate taking the appropriate steps to do so.

Ultimately, it’s a good idea to do your best to reasonably mitigate a loss. Chances are the policy will require it and even if it doesn’t there’s a fair possibility that the courts will impose a common law duty obligating you to mitigate damages even if it’s not explicitly stated in your policy.


1 Does an insured have a duty to mitigate damages when the insurer breaches? Connecticut Insurance Law Journal, 20 Conn. Ins. L.J. 89 (Fall 2013).
2 Id.
3 Klein’s Moving & Storage, Inc., v. Westport Ins. Corp., 196 Misc., 2d 735, 766 N.Y.S. 2d 495 (Sup 2003).

  • Here’s an actual claim:

    A home was severely damaged by a covered peril. Ultimately the insurer paid the policy limit as a constructive total loss. In the meantime, in accordance with the policy provision requiring the insured to protect the property from further damage, temporary roof repair expenses were incurred by the homeowner at the direction of the adjuster. The insurer subsequently refused to pay these expenses on the basis that they were subject to the policy limit and not in addition to the limit. Under the “Reasonable Repairs” Additional Coverage, the policy says:

    This coverage does not:
    (1) Increase the limit of liability that
    applies to the covered property

    In an example like this, the repairs were authorized/ordered by the insurer. In fact, under the Neglect exclusion, the insured is contractually obligated to incur expenses that would not be covered under this circumstance:

    Neglect
    Neglect means neglect of an “insured” to
    use all reasonable means to save and
    preserve property at and after the time
    of a loss.

    Failure to incur this (uncovered in this example) expense could jeopardize the entire claim. As a result, because it is contractually required and, in fact, ordered by the adjuster, the insured MUST pay for this expense whether it reduces the claim or prevent subsequent damage.

    As a matter of equity, do you believe that the Reasonable Repairs coverage should be provided as an additional amount of insurance to the extent that such costs are authorized by the insurer or its representatives?