Insurance is a fact of modern life and a comfort for policyholders when a claimable loss occurs. It’s nice to know when something goes wrong that financially an insurance policy is there to help cover the losses we suffer.
There are some insured people however, who experience a covered loss, which leaves a new risk for more damage. For example, a tree falls on the roof and leaves a gaping hole where rain falls and causes more damage to personal property. By the time the claims adjuster comes to check things out–the damages are much greater then just a big hole in the roof. Some people think the whole loss–including the secondary losses should be covered but the fact is that might not be the case.
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Insurance policies include pages of small print listing what is and isn’t covered and the conditions and exclusions of the coverage. One major condition nearly every policy has is that Insureds must mitigate the loss to prevent damages that are more extensive. Failure to do so can result in a disappointing claims settlement with your insurance company.
So what exactly does Mitigating your losses actually mean?
Well in easy terms, it means insureds must take action to avoid or reduce damages.
Mitigation of damages can apply to nearly any kind of loss a person might suffer, and it also applies when we make claims for liability on another person’s insurance policy. Take a situation where you might claim damages because of an alleged wrongful act on the part of another. You will still have a duty under the law to mitigate your damages and take advantage of any reasonable opportunity, under the circumstances to reduce or minimize the loss or damages.
As the damaged party you may chose to reject the settlement from the insured or their insurance policy thinking that your damages are more sever and you deserve more money to cover these losses. You file and appear in court as a Plaintiff. Perhaps for example, you were disabled by an auto accident and within the limitations any disability you have sustained, you fail to seek out or take advantage of a business or employment opportunity that was reasonably available to you under all the circumstances. The amount of damages awarded may be reduced by the amount you could have reasonably received if you had decided to take advantage that employment opportunity.
Mitigating your damages means you are not allowed to stand by idle and watch further harm come to your personal property, earnings or any other possible thing you might have been able to control after the insured loss took place. Everyone must use reasonable care and diligence to minimize the damages – to do anything you can to prevent additional damage. An injured person under the terms of nearly all insurance polices is required to make a reasonable effort or expend reasonable costs to prevent the amount of loss or harm from increasing.
If a windstorm topples a tree into your house and it rains, you have the responsibility to take steps to prevent damage from water entering your home and causing more damage. The actual steps required by a person to mitigate damages are usually decided on a case-by-case basis, and is set as what is “reasonable” under the particular circumstances.
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A homeowner with a tree in their house would be expected to find some way to cover the hole and prevent rain from entering the house, until the repair was made and the claim resolved. In many situations, the costs you spend to mitigate more extensive loss would be reimbursed as a part of the loss you have suffered. Your first step would be to get someone to your home to help you cover the hole and include these costs in your claim request. Maybe it is as simple as running to the nearest home improvement store and purchasing a $10.00 tarp you are able to place yourself–other times it might require a professional to come, during holiday or non-business hours to assist in preventing more damage either way your insurance company wants you to be responsible for taking this action.
As an additional side note, the ability to mitigate your losses is part of the concern and reasons that insurance companies do consider your credit score when rating your insurance. A person with limited ability to mitigate their losses will nearly always have a higher claim total. If someone is not able to have a professional do, an expensive and quick repair because they are unable to pay for the repair on the spot will in most cases have more costly damages. If an insured has limited means to pay for a service in an emergency then the insurance company is stuck paying a larger claim.
Related Blogs:
- What to Do When Your Pipes Freeze–Mitigate Your Losses!
- Ask Anna: The Midnight Disaster!
- Personal Risk Management
- Your Credit Score and How It Relates To Insurance
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