Sue and Labor Charges

Sue and Labor Charges is a specialized term in marine insurance, referring to the direct expenses reasonably incurred by the insured or their agents to avoid or minimize loss when the insured subject matter is exposed to an insured peril. These charges differ from general average and salvage charges: general average is shared among ship and cargo parties, salvage charges are claimed by the salvor based on the principle of 'no cure, no pay,' whereas sue and labor charges are paid solely by the insurer, and payment is not conditional on the insured subject matter being saved. Common usage scenarios include cargo transportation insurance, hull insurance, etc. Notes: Sue and labor charges must be reasonable and directly incurred to reduce insured loss; the insured should promptly notify the insurer and retain expense vouchers; the insurer typically pays sue and labor charges separately in addition to the insured amount, but not exceeding the insured amount. Foreign trade practitioners should clearly stipulate sue and labor charges clauses in the policy to facilitate smooth claims in case of cargo damage.