Sue and Labour Clause

The Sue and Labour Clause is an important clause in marine insurance, stipulating that the insured is obligated to take reasonable measures to prevent or minimize loss when the insured subject matter is exposed to a covered peril, and the reasonable expenses incurred thereby shall be borne by the insurer. This clause aims to encourage the insured to actively salvage and avoid the expansion of loss. It is commonly used in cargo transportation insurance, hull insurance, etc. Notes: Sue and labour expenses must be 'reasonable and necessary' and are different from general average and salvage charges—general average is apportioned among the benefited parties, salvage charges are based on the principle of 'no cure, no pay,' while sue and labour expenses are paid solely by the insurer and do not affect the insured amount. Unlike 'exclusions,' sue and labour expenses are an additional liability compensated by the insurer.