What obligation does the Sue and Labor Clause impose on a policyholder?

The Sue and Labor Clause requires a policyholder to take reasonable steps to mitigate losses resulting from an insured peril. This means that when a loss occurs, the policyholder has an obligation to act in a way that limits further damage and expenses. The intent behind this clause is to encourage policyholders to be proactive in preventing additional losses, which can help both the insured and the insurer manage claims more efficiently.

For instance, if a property is damaged due to a storm, the policyholder should take action such as covering broken windows or tarping a leaking roof to prevent further water damage. By doing so, they fulfill the obligation outlined in the Sue and Labor Clause, which can also influence the settlement process when filing a claim.