Document Type : Original Research Paper

Authors

• Mohammad Taqi Rafiei
• reihaneh nadjarzadeh

Abstract

BACKGROUND AND OBJECTIVES: In the realm of law, the intricate relationships between individuals and their ensuing obligations have always captivated legal scholars. Among these obligations, the "insured's duty to mitigate loss" stands out as one that has undergone significant transformation over time. Once a contractual and optional provision, confined to specific insurance sectors, this duty has evolved into an implicit and mandatory obligation across all branches of insurance.
METHODS: This research adopts an analytical-descriptive approach to trace the evolution of this duty from its inception to the present day. The central question guiding this inquiry is: at what stage of development does this duty currently reside, and what ramifications does it hold for the relationship between insurer and insured?
FINDINGS: To address this question, we begin by delving into the theoretical foundations and underlying rationale for this duty. Historically, this duty stemmed from the principle of good faith and the necessity for cooperation between the contracting parties. However, in contemporary times, economic and social considerations have also played a pivotal role in shaping this obligation. The escalating costs of insurance, the imperative to safeguard the financial resources of insurance companies, and the need to prevent potential abuse are among the factors contributing to the mandatory enforcement of this duty. Subsequently, we examine the evolution of this duty across various legal systems, including the Iranian legal system, accompanied by an analysis of the relevant laws and regulations. Within the Iranian legal framework, this duty is enshrined in Articles 11 and 12 of the Insurance Act of 1937, as well as in the general conditions of numerous insurance policies. Furthermore, we scrutinize the prevailing judicial practices concerning this duty, along with the rulings issued by competent judicial authorities, to provide a more comprehensive understanding of its multifaceted dimensions. An examination of judicial decisions reveals that courts have adopted an approach grounded in fairness and equity when interpreting and applying this duty. In instances where the insured has failed to mitigate loss without justifiable cause, courts have reduced or even extinguished the insurer's liability for compensation.
CONCLUSION: Ultimately, by synthesizing the information gathered and analyzing the research findings, we arrive at the conclusion that the insured's duty to mitigate loss is now recognized as a fundamental pillar of insurance contracts and a prerequisite for the insured's entitlement to compensation. Failure to comply with this duty can lead to a reduction or even complete elimination of the insurer's responsibility to indemnify the insured.

Keywords

• Sue and labour clause
• mitigation of loss
• insurance
• commercial insurance

Main Subjects

• Insurance rights