What is the duty to mitigate damages, and how does this duty arise?
In the aftermath of a natural disaster such as a hurricane, you may be wondering what, if anything, do you have to do to comply with your insurance policy, and get paid the maximum amount you are entitled to. Although the specifics of your policy will govern your claim, you should understand some basic principles that will generally apply to most insurance claims.
One of those principles is the duty to mitigate your damages. In essence, this concept means that you have a responsibility to minimize the loss that resulted from the event that caused your damages. Your duty to mitigate damages can arise either explicitly (most insurance contracts will have some language to this effect) or may arise by implication (implied by the law of contracts). In either event, what will be required of you to comply with this responsibility will depend on your specific circumstances. You will not be expected to take extraordinary measures to prevent further damage to your property, but you will be required to take “reasonable” measures so that the loss is minimized.
What are the consequences of failing to mitigate damages?
The idea behind the concept of the duty to mitigate stems from the belief that your insurer should only cover you for the amount of damages actually caused by the covered event, and not for those damages that could have been averted with ordinary prudence. Insurance companies often utilize this principle as a reason to either deny or minimize the amount of coverage you will receive. If, for example, your insurer believes that you could have prevented further damage to insured property by taking some minimal steps, then they may adjust your recovery so that you only receive the value of the damage up until the time when you failed to take such “reasonable” measure. In other situations, your insurer may claim that it is impossible to determine the extent of the damage caused by the covered event, and the damage that occurred as a result of your passive efforts to reduce the loss. In these cases, the insurer may disavow your entire coverage and refuse to pay anything because they would have to speculate as to the amount actually owed.
Because the term “reasonable” is necessarily circumstantial, and possibly open to interpretation, what will be considered to be “reasonable” in your particular situation will depend on the specific facts of your case. However, certain things should be done to ensure you are complying with your duty to mitigate damages. Although seemingly common sense, many of these issues end up being central points of contention in insurance litigation.
How can you comply with your duty to mitigate damages?
For starters, after an event that results in property damage you need to get in the habit of extensively documenting everything. This means you need to take pictures, videos, and possibly even keep logs of damages, contractors or service providers you have called and your reason for calling. If you are fortunate enough to have a warning of the incoming event (such as when a hurricane is anticipated in your area) you should even consider taking before and after pictures. You will need this documentation because the insurance company will conduct an investigation of your claim. They will need lots of documentation from you to ensure that they are not paying out more than they are required to on your coverage. Remember, the burden of proof is on you to demonstrate that your damages are in fact covered by your policy. Considering the amount of claims that insurance companies will be dealing with after a serious hurricane like Irma, you can expect them to be very wary of insurance claims.
Once you have assessed your damage, you need to immediately contact your insurer and report all the damages you have sustained. Again, time is of the essence and this must be done as soon as is practically possible. This will put them on notice of the damage, and will allow them the opportunity to address your situation. Even if they are not proactive about your claim it is important that you are, because a failure to be diligent may provide your insurer with a reason to deny your claim. After an event such as a hurricane, when there may be thousands of people filing claims, you can expect your insurer to be delayed in responding to your claim. You may not even see an insurance adjuster for weeks. Nonetheless, simply documenting and reporting your damage will not suffice. As stated, you will be expected to take reasonable measures to protect your property and minimize the loss.
In order to comply with your duty to mitigate you may be required to do such things as: placing a tarp over a leaky roof to prevent further water damage, drying up wet carpets or areas to prevent mold, shutting off a leaky water pipe to prevent further flooding, or covering broken windows to prevent rain from entering. The duty is always present when you are dealing with insurance matters, and you need to assure you are compliant if you want to receive what you are owed.
If you do not hold up your end of the bargain, then your insurer may only be require to cover you for the amount of the loss before you breached your duty to mitigate damages. So if you failed to cover a broken window, and as a result sustained water damage or mold from rain entering through that window, your insurer will not be responsible for those expenses. Furthermore, your insurer may successfully argue that determining the amount of damages before you breached is too speculative and you may not end up recovering anything. Be aware, and be prudent. You don’t have to do anything extraordinary; you just have to be careful.
Of course, insurance company will make extraordinary efforts to avoid paying claims. If your insurance company denies your claim or lowballs your claim, don't take their position as gospel, and seek professional advice.
You can reach Miami Insurance Claims Lawyer J.P. Gonzalez-Sirgo by dialing his direct number at (786) 272-5841, calling the main office at (305) 461-1095, or Toll Free at 1 (866) 71-CLAIM or email Attorney Gonzalez-Sirgo directly at [email protected].