An insured watching a loss form has no right to watch it come. Every policy contains a duty to mitigate, often drafted in one short sentence and never discussed at inception, and that sentence requires taking the reasonable steps a prudent insured would take if it were uninsured. The formula is old and it aims at something precise: insurance must not turn an avoidable loss into a certain one merely because it will be reimbursed. It is the same concern that governs inducement exclusions, applied this time not to what one causes but to what one refrains from preventing.
The favourable side of that duty is less known and matters as much. Costs incurred to limit the loss are in principle recoverable, including where the measure fails, and sometimes even where it later appears the loss was not covered, depending on the drafting. The reason is economic rather than moral: an insurer would rather pay a hundred thousand euros of evacuation than a million of shutdown, and it would lose that advantage if the insured had to await confirmation before acting. The duty and the reimbursement are therefore two faces of one mechanism, and an insured that knows only the first hesitates exactly when it should not.
Then comes the difficulty peculiar to political risk, which is one of time. In ordinary classes, mitigation follows a dated event: the fire happened, one sheets the roof. Here the event is a process, and whether there is a loss at all stays open for months. The insured must therefore decide to evacuate, to mothball a plant or to repatriate expatriates while nobody can tell it whether cover will respond. It incurs certain expenditure against uncertain reimbursement, and it is that asymmetry which produces inaction, not ignorance of the rule.
One must then say what happens when the insured abstains, because the sanction is harsher than supposed and is poorly understood. The insurer does not indemnify the part of the damage a reasonable measure would have avoided; it does not decline the claim, it deducts. The difficulty for the insured is evidential and it runs against it: one will have to reconstruct what an untaken measure would have cost and what it would have saved, a hypothetical exercise in which the insurer will produce unfavourable estimates that nothing contradicts since nothing was done. An insured that acted argues over real figures; an insured that abstained argues over an imaginary world, and it does so at a structural disadvantage.
A second rule crosses the first and must be held, that of prior consent. Many policies require the insurer's agreement before significant costs are incurred, which is understandable, and that requirement collides with urgency as soon as a situation deteriorates fast. The reading that holds, and which serious wordings set out expressly, distinguishes by whether consultation was possible: where urgency makes consent impossible, the insured acts and informs without delay; where it does not, the insured consults. The practical question is therefore never to choose between acting and asking, it is to document why one could not ask, which takes three dated lines and is done very badly after the event.
A third point deserves stating because it decides how expenditure is characterised. Not every sum spent in a crisis is a mitigation cost. Securing a site, blanketing machinery under inert gas, evacuating staff, moving stock, are measures aimed at preventing or reducing covered damage. Paying wages during a shutdown, honouring commercial commitments, maintaining local cash, are operating charges belonging where applicable to business interruption cover and not to salvage costs. The distinction looks formal and it decides the fate of the sums: they attach to different heads, do not follow the same limit, and sometimes do not fall under the same deductible.
Finally one must see the most lasting effect, which is not financial. An insured that took dated mitigation measures, decided in board minutes and carried out, thereby produces the best evidence it will ever hold of the moment control was lost or of the real gravity of the threat. The chronology built to justify expenditure then serves to establish the triggering event, and the two files feed one another. A group that evacuated its expatriates on 12 March by written decision holds a document that neither a press report nor a later statement replaces.
Four gestures suffice, and none is costly. Act where a reasonable measure reduces a probable loss, without waiting for certainty of cover, because abstention costs more than error. Inform the insurer immediately, even where consent was impossible, and write down why it was. Track expenditure by nature from day one, separating salvage from operations, which is impossible to reconstruct six months later. And keep the decisions themselves, minutes and dated instructions, because they will serve twice, once to obtain reimbursement and once to prove the fact.
An industrial group operates a chemical plant and a depot in a country where an uprising has been spreading for six weeks. On 12 March 2026 the neighbouring town falls to an armed group; the group's board decides the same day to evacuate its thirty one expatriates and to mothball the plant, a process requiring the reactors to be emptied and inerted. Costs incurred without waiting: 1.4 million euros of evacuation, 2.2 million of mothballing, plus 3.1 million of local staff wages maintained during the four month shutdown. The insurer could not be reached between 12 and 16 March, its regional offices being closed; it was informed on 16 March by detailed email. The site suffered no physical damage in the end, the armed group never approaching it. The insurer argues that absent damage there is no loss, therefore no costs to reimburse. What is the answer?
The insurer's argument inverts the logic of the duty to mitigate and that must be said at the outset: if costs were payable only where damage actually occurred, no insured would ever take a preventive measure, and the insurer would lose precisely the saving the clause exists to produce. The rule is that costs reasonably incurred to prevent or reduce a covered loss are recoverable including where the measure succeeds, the absence of damage being here the demonstration that it worked and not proof that it was needless. One must then check what the policy actually says, because two wordings circulate: one making reimbursement conditional on an imminent threat of a covered peril, and a narrower one making it conditional on a notified loss. Under the first the file is good; under the second the argument is real and is fought on imminence. A neighbouring town falling to an armed group, with a chemical plant and thirty one expatriates, establishes that imminence in a way hard to contest. On prior consent the group's position is strong provided it is documented: the regional offices were closed, notice was given on 16 March with detail of the measures, and that is exactly the case of urgency making consultation impossible. The record of attempted contacts on 12, 13 and 14 March must be produced, and if nobody logged them, that is the weakness of the file rather than of the principle. There remains the characterisation of the sums, where the insurer is right on one point and it is better conceded frankly than disputed: the 1.4 million of evacuation and 2.2 million of mothballing are mitigation costs, but the 3.1 million of maintained wages are operating charges, belonging where applicable to business interruption cover with its own limit and its own deductible, and not to salvage. Claiming all three heads together would weaken the first two, which are sound.
- 01The duty to mitigate and the reimbursement of costs incurred are two faces of one mechanism: whoever knows only the first hesitates when they should not.
- 02The insurer does not decline the abstaining insured's claim, it deducts what a reasonable measure would have saved, and the insured must then argue an imaginary world.
- 03Prior consent yields to urgency, but three dated lines must record why consultation was impossible, which is done very badly after the event.
- 04Salvage and operations are distinct: evacuating and mothballing are mitigation costs, maintaining wages is an operating charge following different cover.
- 05Dated decisions serve twice, to obtain reimbursement and to prove the triggering event: it is the best document an insured will ever hold.