The Cost of Compliance: Can A ?Ç£Sue and Labor?Ç¥ Clause Offset The Price Of Enhanced Government Regulation?
This is the age of government regulation.?á Businesses pay millions of dollars each year to comply with ever-increasing regulatory requirements intended to avoid catastrophic loss to persons and property.?á While corporate America underwrites the lion?ÇÖs share of the cost associated with enhanced safety, the benefits are realized primarily by consumers, politicians and insurers.?á Yes, insurers.?á A dollar spent on preventing loss is a dollar saved by insurance companies. Historically, the economic realities of this inverse moral hazard were addressed in ocean marine insurance policies by the ?Ç£sue and labor?Ç¥ clause. ?áIf, for example, a ship owner repaired a breach in a vessel?ÇÖs hull thereby preventing the loss of the ship and cargo, the cost of repairing the hull would be reimbursed under a ?Ç£sue and labor?Ç¥ clause.?á While the earliest ?Ç£sue and labor?Ç¥ provisions date back as early as the seventeen century, most modern commercial property policies have a ?Ç£sue… Continue Reading