Legal Definitions - rescue clause

A rescue clause, also known as a sue-and-labor clause, is a provision commonly found in insurance policies, particularly in marine, property, and specialized asset insurance. This clause encourages the insured party to take reasonable and necessary steps to prevent, minimize, or recover insured property from an impending or actual loss. If the insured incurs expenses doing so, the clause obligates the insurer to reimburse these costs, even if the primary loss was ultimately avoided or if the expenses exceed the value of the recovered property, provided the actions were reasonable and taken to protect insured property from an insured peril. The purpose is to incentivize proactive measures that can reduce the overall cost of a claim for both the insured and the insurer.

Here are some examples illustrating how a rescue clause works:

• Imagine a cargo ship carrying a valuable shipment of perishable goods, insured against spoilage, encounters unexpected engine trouble far from its destination. The captain, recognizing the risk of the refrigeration system failing, immediately diverts the ship to the nearest port for emergency repairs and arranges for the most sensitive cargo to be temporarily offloaded and stored in a refrigerated warehouse. The costs associated with the diversion, port fees, and temporary cold storage would be covered under the rescue clause in the cargo insurance policy. These actions were reasonable steps taken to prevent a greater loss (the spoilage of the entire shipment) from an insured peril (mechanical breakdown affecting refrigeration).

• Consider a manufacturing plant that experiences a sudden, severe electrical surge, causing a small fire in one section of the facility. The plant manager, fearing extensive damage to expensive machinery, quickly activates the internal fire suppression system and immediately hires an emergency cleanup crew to remove water, set up industrial dehumidifiers, and move sensitive equipment to a dry, safe area. Even if the machinery ultimately suffers some damage, the costs of the emergency cleanup, water extraction, and equipment relocation would be reimbursed under the rescue clause in their property insurance. These proactive steps minimized further damage from the fire and water, which were insured perils.

• An art gallery has several priceless sculptures insured against theft and damage. A major water main breaks on the street outside, causing water to rapidly flood the gallery's basement, where some less frequently displayed but still valuable pieces are stored. The gallery owner and staff quickly work to move these sculptures to higher ground within the building and then arrange for professional art conservators to assess and stabilize any pieces that came into contact with water. The expenses for the emergency relocation, specialized handling, and initial conservation efforts would be covered by the rescue clause in their fine art insurance policy. These actions were reasonable and necessary to protect the insured artworks from significant water damage.