Duhaime's Law Dictionary


Sue and Labour Clause Definition:

A standard clause in a maritime insurance policy which allows the insured to recover from the insurer any reasonable expenses incurred by the insured in order to minimize or avert a loss to the insured property, for which loss the insurer would have been liable under the policy.

Derived from the standard and original Lloyd's insurance policy which provided a clause which became known as a sue and labour clause:

"And in 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 their defence, safeguards, and recovery of the said goods and merchandises and ship etc., or any part thereof, without prejudicing to this insurance; to the charges whereof we, the assurers, will contribute ...."

In Johnston v The Salvage Association and McKiver, Justice Lindley uses these words:

"The nature and effect of the suing and labouring clause ... is in substance a contract by which the underwriter agrees to pay the assured the expense he may reasonably and properly incur in preventing a loss which, if it occurred, would fall on the underwriter under the other clauses in the policy."

Sue and labour charges are distinct from general average or salvage costs.

Thus, §79 of the Canadian Marine Insurance Act:

"Where a marine policy contains a sue and labour clause, the engagement thereby entered into is supplementary to the contract and the insured may recover from the insurer any expenses properly incurred under the clause, even if the insurer has paid for a total loss of the subject-matter insured .... General average losses, general average contributions, salvage charges, and expenses incurred for the purpose of averting or diminishing a loss by a peril not insured against are not recoverable under a sue and labour clause."

Similarly, §78 of the 1906 Marine Insurance Act of England:

"Where the policy contains a suing and labouring clause, the engagement thereby entered into is deemed to be supplementary to the contract of insurance, and the assured may recover from the insurer any expenses properly incurred pursuant to the clause, notwithstanding that the insurer may have paid for a total loss, or that the subject-matter may have been warranted free from particular average, either wholly or under a certain percentage.

"General average losses and contributions and salvage charges, as defined by this Act, are not recoverable under the suing and labouring clause.

"Expenses incurred for the purpose of averting or diminishing any loss not covered by the policy are not recoverable under the suing and labouring clause.

"It is the duty of the assured and his agents, in all cases, to take such measures as may be reasonable for the purpose of averting or minimizing a loss."

Absent an applicable and mandatory statute to the contrary, the wording of the insurance policy will be determinative as to the scope of the sue and labour protection.

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