...clause is a separate insurance provision only in the sense that the insured’s losses are not subject to the application of any deductibles or the policy’s limits of liability. One of the earliest forms of this clause read:
And in the case of any loss or misfortune it shall be lawful to the assured, their factors, servants and assigns, to sue, labour, and travel for, in and about the defense, safeguards, and recovery of the said goods and merchandise, and ship, or any part thereof, without prejudice to this insurance.
[T]o the charges whereof we, the assurers, will contribute each one according to the rate and quantity of his sum herein assured.
And it is especially declared and agreed that no acts of the insurer or insured in recovering, saving, or preserving the property insured shall be considered as a waiver, or acceptance of abandonment.
According to one source, a “cardinal principle” in dealing with these clauses insofar as marine insurance is concerned is that “the loss averted or minimized must arise out of the basic and standard perils insured against . . . and must be loss for which the underwriters are liable.” 7 This confirms that the sue and labor clause is for the benefit of the insurer, which may be able to capitalize on having to pay less for a covered loss when an insured takes steps to minimize a loss.
Sue and labor clauses can be found today in some property policies, including builders risk and difference in conditions (DIC) forms. The following is taken from a policy of a domestic insurer providing coverage on a special causes of loss basis (all risks):
In case of actual or imminent loss or damage, it shall, without prejudice to this insurance, be lawful and necessary for the Assured, their factors, servants, or assigns, to sue, labor, and travel for, in, and about the defense, the safeguard, and the recovery of the property or a part of the property insured hereunder; nor, in the event of loss or damage, shall the acts of the Assured or of this Company in recovering, saving and preserving the insured property be considered a waiver or an acceptance of an abandonment. This Company shall contribute to the expenses so incurred according to the rate and quantity of the sum herein insured.
Not all of these provisions are the same. The above one applies to both imminent or actual loss.