Over the past few weeks I have posted on the duty to notify the insurer that a loss has occurred. Having sufficiently beaten that horse into the ground, for the next few weeks I will post on what is generally considered to be the second obligation under a policy: the duty to protect the property from further damages.
Most policies read something like this:
B. Duties After Loss
4. Protect the property from further damage. If repairs to the property are required, you must:
a. Make reasonable and necessary repairs to protect the property and;
b. Keep an accurate record of repair expenses
In the industry, this is called “mitigating the loss,” which means taking steps to keep the severity of the loss from increasing. While the language of a particular policy may be different, the general principle remains the same and for good reason. Pennsylvania Lumbermens Mut. Fire Ins. Co. v. Nicholas, 296 F.2d 905 (C.A.Fla. 1961). Simply put, this provision is intended to keep the loss from unnecessarily increasing and thus increasing the cost to both the insured and the insurer.
Keep in mind that this does not mean that permanent repairs are immediately required. In most, if not all, cases, this means that temporary repairs must be made to ensure that the damages do not get worse. Tarping a damaged roof to keep rain water out or turning off the water supply to a broken pipe are both common temporary repairs which can be sufficient to mitigate the loss.
While this may seem like common sense, even a cursory reading of the provision above should raise some red flags. There can be many questions raised regarding whether the temporary repairs were “reasonable,” “necessary,” or even possible. This can cause a wide variety of issues with a claim and can provide the insurer with an excuse to avoid prompt payment under the policy and could even lead to the claim being denied.
Over the next few weeks, I will post on many of the issues surrounding this obligation. As always, I welcome and encourage your comments and questions. In the end, these posts are for the readers, so please feel free to chime in.