To date, the most significant Year 2000 insurance coverage disputes have focused on a rather arcane provision-the “sue and labor” clause.
This clause, which originated hundreds of years ago in marine insurance, is found today in some all-risk property policies. Although the specific terms vary widely, sue and labor provisions generally require the policyholder to protect or preserve the insured property in case of actual or imminent covered loss. To encourage such efforts, the insurer generally promises to reimburse a portion of the policyholder’s reasonable expenses. An example of a reimbursable expense might be the reasonable costs of salvaging sunken goods from the ocean floor.
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