Category: Claims handling · Reviewed by Tim Roche, Director · PI & Commercial · Last reviewed 2026-06-11
The mitigation duty requires a claimant to take reasonable steps to minimise its loss following a breach or wrong — failure to do so disentitles the claimant to recover the part of the loss attributable to the failure.
The duty to mitigate is not a duty owed to the wrongdoer; it is a rule of damages assessment. The claimant is entitled to recover all losses caused by the breach, but cannot recover losses it could have avoided by taking reasonable steps. The principle is the embodiment of the policy that the law will not compensate avoidable consequences of avoidable conduct.
In insurance claims handling, mitigation is relevant both ways. The insured has a duty under most policies (and at common law for some) to take reasonable steps to minimise the loss after a casualty. The third-party claimant in a liability claim also has a duty to mitigate; failure may reduce the recovery against the insured (and so the insurer’s exposure).
The foundational authorities are:
In insurance contract law, most policies contain express mitigation clauses requiring the insured to act as a prudent uninsured would have acted. The Insurance Act 2015 section 11 prevents reliance on such clauses where the breach could not have increased the risk of the loss. The Consumer Insurance (Disclosure and Representations) Act 2012 also bears on consumer insurance contracts.
For first-party property losses, the duty to mitigate after the incident is well-established and is usually backed by an “Insurer’s Rights” clause allowing the insurer to take steps the insured has failed to take, and to recover the cost from the insured. For business interruption, mitigation is critical — the insured must take steps to resume business, and failure to do so reduces the BI claim.
For third-party liability claims, the claimant’s duty to mitigate runs alongside the law of causation and remoteness. The Liesbosch [1933] AC 449 (though now criticised) addressed mitigation in the context of impecuniosity.
The mitigation analysis runs through:
First, identify the act or omission that is said to constitute failure to mitigate. The claimant is not required to do everything possible; only what a reasonable person would have done in the circumstances.
Second, evaluate the cost of the mitigation step against the loss it would have avoided. A step that would have cost £100,000 to avoid £50,000 of loss is not reasonable.
Third, evaluate the claimant’s actual position. Impecuniosity may be a defence to mitigation criticism, depending on the facts (The Liesbosch doctrine has been heavily qualified by Lagden v O’Connor [2003] UKHL 64).
Fourth, allow for the time and circumstances. A claimant is not required to make instant decisions; reasonable steps can take reasonable time.
Fifth, account for any successful mitigation actually undertaken — the benefit is set off against the loss.
For first-party property losses, the typical mitigation issues are: did the insured take reasonable steps to secure the property after damage; did the insured engage contractors to begin reinstatement promptly; did the insured take steps to preserve damaged equipment for salvage; did the insured resume business as quickly as reasonably possible. Loss adjusters track these questions from FNOL onwards.
For BI claims, mitigation analysis is central to quantum. The insured must demonstrate it took reasonable steps to resume operations, find alternative premises, retain key staff, satisfy customers. The forensic accountant’s BI report typically includes a mitigation analysis.
For third-party liability claims, the defence team examines the claimant’s conduct after the incident — did they accept medical treatment, did they undertake rehabilitation, did they look for alternative employment, did they make sensible commercial decisions. Failure to mitigate is one of the principal arguments deployed against high quantum.
“Voluntary mitigation” — steps taken by the claimant beyond what was strictly required; the benefits accrue to the defendant under British Westinghouse.
“Failed mitigation” — steps taken by the claimant that were reasonable but proved unsuccessful; the costs are usually recoverable as part of the damages.
“Impecuniosity” mitigation — where the claimant’s lack of funds prevented mitigation. The modern view (Lagden v O’Connor) is more sympathetic to impecunious claimants than the older The Liesbosch approach.
“Reasonable refusal” — where the claimant declines a mitigation step on reasonable grounds (medical treatment with unacceptable risk, business decision based on legitimate commercial considerations).
A retailer’s flagship store suffers a major fire. The loss adjuster’s report addresses mitigation in several respects:
The mitigation analysis materially shapes the final BI figure (settled at £4.2m against an unmitigated claim of £5.6m) but does not affect the property reinstatement figure (settled at £6.8m).
By Matt Bartlett, Director, on 2026-06-11. Next review: 2026-12-11.
This entry is part of the Apex Insurance Wiki. Last reviewed by Matt Bartlett on 2026-06-11. Apex Insurance Brokers Limited, FCA FRN 724952, Companies House 07014570. Not regulated advice — consult your broker on your specific position.
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