Government and Federal Aviation Administration (FAA) safety directives have led to a reduction in flights beginning November 7, 2025, to protect people and property from potential accidents. The FAA’s Emergency Order Establishing Limitations on the Use of Navigable Airspace explains that the restrictions are necessary “to ensure the safety of aircraft” and “[t]o maintain the highest standards of safety” in the National Airspace System. For companies whose operations or revenues are affected, these measures may give rise to recoveries under general liability and property insurance policies.

The rationale is straightforward. The FAA’s order recognizes that safety was being compromised unless flight volumes were reduced. FAA Administrator Bryan Bedford explained that a shortage of air traffic controllers has created systemic strain and that “fatigue is building in the system.” He emphasized that the FAA is acting now because “we just can’t ignore it.” [1] Bedford and Transportation Secretary Sean Duffy “repeatedly framed the decision as a pre-emptive, safety and data-driven measure,” with the stated goal of maintaining safety. [2] As Bedford further noted, “We’re not going to wait for a safety problem to truly manifest itself when the early indicators are telling us we can take action today to prevent things from deteriorating.” [3]

Courts have long recognized that when an insured takes reasonable actions to prevent an imminent loss—whether voluntarily or in response to government directives—those preventive measures may be covered under both liability and property policies. This principle is grounded in the common-law mitigation doctrine and, in the case of property policies, in “loss prevention” or “sue-and-labor” clauses. Under liability policies, the goal is to reduce the likelihood of claims, lawsuits, or damages—such as those that could result from an aircraft accident. Under property policies, the goal is to avoid or minimize losses to property or business income arising from the same peril.

Simply put, “an insurer is liable . . . [i]f a loss is caused by efforts to rescue the thing insured from a peril insured against.” Cal. Ins. Code § 531. When an insured acts to prevent or reduce a threatened loss, it “acts for the benefit of the insurer,” giving rise to the insurer’s duty “to reimburse the insured for prevention and mitigation expenses.” S. Cal. Edison Co. v. Harbor Ins. Co., 83 Cal. App. 3d 747, 757 (1978).

Liability Insurance Policies

One of the leading cases is Globe Indemnity v. California, 43 Cal. App. 3d 745 (1974). There, the court held that fire suppression costs incurred to prevent a fire from spreading from the insured’s property to neighboring property were covered as “sums which the insured became legally obligated to pay as damages because of . . . property damage[.]” Id. at 748. The court explained that it could not “conceive as a reasonable rule of law that which would encourage an insured property owner not to report that neighboring property was being destroyed by reason of his negligence in permitting a fire to escape from his property because his insurance would cover him for the property damage but not for the fire suppression costs.” Id. at 751.

Many other courts have reached the same conclusion, holding that mitigation expenses are covered under liability policies:

  • AIU v. Superior Court, 51 Cal. 3d 807, 833 & 841 (1990): Insurers must pay insureds’ costs of complying with government injunctions issued to remedy damage and prevent future damage; “reimbursement of environmental responses costs—whether incurred for remedial or mitigative purposes—is not an uninsurable cost of doing business . . . .”
  • Aronson Ass’n, Inc. v. Pennsylvania National Casualty Insurance Co., 14 Pa. D. & C. 3d 1, 6–7 (1977): “[The insured] acted promptly in accordance with the instructions given by the [government agency] and protected against seepage of the escaped gasoline into underground water supplies, an occurrence clearly covered by the policies. In doing so [the insured] was acting to prevent the accumulation of sizable claims for damages against itself and [the insurer].”
  • Bankers Trust Co. v. Hartford Accident & Indemnity Co., 518 F. Supp. 371, 373 (S.D.N.Y. 1981): Work done to “prevent damage to property of third parties” is covered when, “if the preventive work had not been done, the oil would have continued to seep into the river for a substantial period hereafter, and . . . [the insureds] and . . . ultimately [the insurer] would have to spend much more to clean up the resulting damage.”
  • Goodyear Rubber & Supply, Inc. v. Great American Insurance Co., 545 F.2d 95, 96 (9th Cir. 1976): The insurer was obligated to pay costs incurred by a tugboat in rescuing a burning barge and suppressing the fire; “[i]t would be a strange kind of justice, and a stranger kind of logic, that would hold the [insurer] liable for [a greater amount] if the barge and its contents had been consumed by fire, but free of liability for a much lesser amount because of the fortuity of rescue.”
  • Intel Corp. v. Hartford Accident & Indemnity Co., 692 F. Supp. 1171, 1190–93 (N.D. Cal. 1988): “[T]he reasonableness and social utility of mitigation . . . has been adopted by numerous courts.”

Property Insurance Policies

Courts have reached similar conclusions under the loss-prevention or “sue-and-labor” clauses in property insurances.  The following are some examples:

  • Archer Western-De Moya Joint Venture v. ACE American Insurance Co., 2023 WL 11802486, at *2 (S.D. Fla. July 12, 2023): “Under well established duties between an insured and an insurer, an insured who avoids or minimizes insurable loss for the insurer’s benefit is entitled to be reimbursed by the insurer for prevention and mitigation expenses.”
  • Papa v. Mississippi Farm Bureau Casualty Insurance Co., 573 So. 2d 761, 763–64 (Miss. 1990): Rejecting the notion that the insured must wait for damage to begin before acting to avert it; “[u]nquestionably, mitigation of damages would be consistent with insurers’ interests.”
  • Reliance Insurance Co. v. The Escapade, 280 F.2d 482, 488 (5th Cir. 1960): “[T]he history, function and purpose of the Sue and Labor Clause . . . may be briefly stated. Since an assured has the duty toward his underwriter to exercise the care of a prudent uninsured owner to protect insured property in order to minimize or prevent the loss from the occurrence for which the underwriter would be liable under the policy, the clause undertakes to reimburse the assured for these expenditures which are made primarily for the benefit of the underwriter either to reduce or eliminate a covered loss altogether.”
  • Winkler v. Great American Insurance Co., 447 F. Supp. 135, 142 (E.D.N.Y. 1978): If the insured had raised his house to avoid flood damage, the insurer would have to pay the expenses because “the duty to protect the property from further damage implies a responsibility on the insurer’s part to pay for the costs of reasonable protective measures.”

Recovery of Expenses Incurred Before Any Accident

Insurers may argue that no coverage exists because no physical damage has yet occurred. That argument should be rejected. The purpose of the mitigation doctrine and loss-prevention clauses is precisely to encourage proactive steps that prevent far greater losses later. In Leebov v. United States Fidelity & Guaranty Co., 165 A.2d 82 (Pa. 1960), the court recognized that if the insured had not acted promptly to address “the perilous situation, disastrous consequences might have befallen the adjoining and nearby properties.” Id. at 84. The court explained:

It is folly to argue that if a policy owner does nothing and thereby permits the piling up of mountainous claims at the eventual expense of the insurance carrier, he will be held harmless of all liability, but if he makes a reasonable expenditure and prevents a catastrophe, he must do so at his own cost and expense.

Id.

The success of mitigation efforts does not negate coverage merely because no loss ultimately occurred. As the Fourth Circuit explained, an insured is entitled to recover mitigation costs “whether or not [its] attempts were successful,” so long as “the claimed expenditures were reasonable under the circumstances.” Insurance Co. of N. Am., Inc. v. U.S. Gypsum Co., 870 F.2d 148, 154 (4th Cir. 1989).

Coverage for Losses from Flight Reductions

For airlines, airport service providers, logistics companies, and suppliers, temporary operational reductions aimed at avoiding crashes or other catastrophic events fall squarely within this doctrine. Expenses and lost income associated with such preventive actions should be treated as covered mitigation costs—not uncovered voluntary measures.

Steps to Take to Procure Coverage

To preserve their rights, insureds should promptly document:

  • The government and FAA warnings identifying the safety risks and directing flight reductions;
  • The specific measures taken to reduce or suspend operations; and
  • The anticipated losses or expenses directly tied to those steps and the consequences of the government directives.

Maintaining this record will demonstrate that the reductions were reasonable, necessary, and undertaken to avert an imminent insured peril—exactly the kind of action that insurance law encourages and protects. In addition, insureds should promptly notify their insurers of all related losses and expenses to avoid any argument that they failed to comply with policy conditions requiring timely notice or other procedural steps.

Contacts

Los Angeles
Kirk A. Pasich
Shaun H. Crosner

Atlanta
Anthony P. Tatum
Shelby S. Guilbert, Jr.

New York
Stephen G. Foresta
Aaron F. Jaroff

Charlotte
Alec Covington

Houston
Jeremiah J. Anderson

[1] NBC News, The FAA is set to start cutting flights to contend with delays and staffing shortages (Nov. 6, 2025).

[2] GovFacts, Why the FAA Ordered a 10% Flight Reduction (Nov. 6, 2025)

[3] Id.