What Is Mitigation?
Mitigation occurs when the party suffering a loss in an insurance claim takes reasonable steps to avoid further losses. As a homeowner, you are required to mitigate losses following an event as a condition of your coverage. If you are a homeowner, it is critical that you understand the meaning of mitigation as it relates to your home insurance policy, your responsibilities in the mitigation process, and what happens if you fail to fulfill your duty to mitigate.
What Is Mitigation in Insurance?
Damages mitigation is a legal doctrine that prevents a party who has suffered a loss from being compensated for damages that could have been avoided with reasonable efforts. This fundamental principle applies to many types of insurance claims, and policyholders must comply with the duty to mitigate damages in order to receive the maximum claim reimbursement.
The duty to mitigate damages entails taking common-sense steps to reduce additional losses after the initial loss. This duty may be expressly stated in your policy documents or implied by general contract law. The nature of the loss you've suffered, as well as the specifics of your policy, determine your duty to mitigate.
How Mitigation Works in Home Insurance
In general, mitigation does not necessitate extraordinary measures on your part—merely logical actions to prevent secondary damages following an event. These do not include actions that put you or others in danger or go beyond your current abilities or skills. Prudent measures to avoid additional losses include:
- A plastic tarp is being used to keep rain out of a broken window.
- Removing fallen trees and branches from your roof or property
- Putting out a kitchen fire or calling the fire department right away.
- To prevent mold growth after a pipe burst, dry out wet or damp areas in your home.
How To Comply With Your Duty To Mitigate
The first step is to assess and document property damage with photos and videos, followed by reporting all damages to your insurer as soon as possible. Keep a phone log of calls to professionals or service providers as your claims process progresses. If there are numerous other claims in your area, the insurance company may take some time to send an adjuster to your home.
Regardless, while you wait for the adjuster, you must take reasonable and timely steps to reduce secondary losses. If you're unsure about how to mitigate damage in your situation, your claims representative can offer ideas and suggestions.
An Example of Loss Mitigation After Water Damage
Assume that a burst pipe floods your home. After documenting the property damage and filing a claim, you may take some of the following steps to reduce future losses:
- Turning off the water for the ruptured line.
- Removing wet items from your home such as carpets, clothing, and furniture
- Using a portable wet vacuum to extract water from and dehumidify small areas.
- For larger areas or those with extensive damage, contact a water-damage restoration service.
- Making temporary repairs, such as draping a tarp over any remaining leaks.
If you're concerned about the financial burden of reasonable mitigation, you should know that many home insurance policies cover reasonable mitigation tasks. However, it is critical to review and comprehend your policy documents for specifics on what efforts your insurance covers.
Consequences if You Don’t Mitigate Risk
Failure to do your part in risk mitigation may result in you not receiving full compensation for your property loss, depending on your policy terms and the jurisdiction in which the claim is filed. For example, if you fail to mitigate the primary loss, the insurer may refuse to cover additional losses.
In the worst-case scenario, failing to mitigate the risk of further damages could result in your claim being denied entirely because your insurer may argue that determining the original damage is too speculative.
The common denominator in both cases is that you would have to pay more out of pocket than if you had taken precautions to safeguard, salvage, and protect your property after the primary loss.