Duty to Mitigate Loss (Schadenminderungspflicht)

Concept

The duty to mitigate loss is a policy condition imposed on the policyholder in the event of an insured event, requiring the policyholder to take reasonable measures to avert or reduce a threatened or already occurred loss. It applies both before and after the occurrence of the insured event and supplements the policyholder’s general duty of disclosure and information.

Scope of Reasonable Measures

Typical measures expected within the bounds of reasonableness include promptly shutting off a water supply after a pipe burst, calling the fire brigade in the event of a fire, or providing first aid to an injured person; which measures are specifically reasonable depends on the circumstances of the individual case, in particular the objective feasibility and proportionality of the action for the policyholder.

Legal Consequences of Breach

If the policyholder breaches the duty to mitigate loss intentionally or through gross negligence, the insurer may reduce its benefit in whole or in part, to the extent the breach was causal for the amount of the loss actually incurred; a causation test is generally decisive here, under which the reduction in benefit is limited to the extent of the additional loss caused by the breach of the policy condition.