Ch : 8 Contribution And Subrogation Flashcards

1
Q

Which condition restricts the insurers liability to its rateable proportion or rateable share of a loss

A

Contribution condition

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2
Q

Definition of contribution

A

Contribution is the right of an insurer to revivert part of a claim payment where two or more policies cover the same interest , the same risk and are in force when the loss occurs

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3
Q

How contribution arises

A

1.two or more policies of indemnity must exist
2.the policies cover a common insurable interest
3.The policies must cover a common peril which gives rise to the loss
4.the policies must cover common subject matter
5.each policy must be liable for the loss
6.Neither policy must contain a non contribution clause

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4
Q

Only applies where the policies cover a common interest in the subject matter

A

Contribution

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5
Q

Contribution principle was established in the case of

A

North British and mercantile v. Liverpool and London and globe (1877), known as the King and Queen granaries case

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6
Q

What is rateable proportion

A

Is the share of any claim that an insurer pays when two or more insurers covers the same risk,usually in proportion to the respective sum insureds

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7
Q

Ways of determining rateable proportion of claim

A

1.By sum insured
2.By independent liability

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8
Q

Rateable proportion formula * Sum insured )

A

Policy sum insured ÷ total sum insured ( all policies ) × loss

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9
Q

What is independent liability method

A

This method calculates the amount payable under each policy as if no other policy existed and the insurers was alone in indemnifying the insured

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10
Q

Which method is use where property policies are subject to average or where an individual loss limit applies within a sum insured

A

Policy sum insured ÷ total value at risk × loss

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11
Q

Non contribution may be worded as

A

This policy shall not apply in respect of any claim where the insured is entitled to indemnity under any odr insurance

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12
Q

Definition of subrogation

A

As the right of an insurer, following payment of a claim ,to take over the insurerds rights to recover payment from a TP responsible for the loss. Its is limited to the amount paid out under the policy

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13
Q

Subrogation rights may arise in 3 ways

A

1.Tort
2.Contract
3.Statue

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14
Q

Which claims need to b notified within 7 days of the event

A

Riot ,civil commotion and malicious damage

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15
Q

When can insurer can offer total loss settlement

A

If the insurer regards that is the subject matter of insurance as being beyond economic repair

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16
Q

When it’s considered uneconomic

A

If repair exceeding 60% of market value

17
Q

Hold harmless clause

A

Prevents the insured from pursuing recovery rights

18
Q

Principle of insurance seeks to share the burden of loss fairly among all insurers who covers the loss

A

Contribution

19
Q

In common law,a breach of duty to act in a reasonable way towards others is knwn as

A

A tort

20
Q

Which policy do not have subrogation rights

A

Benefit policy

21
Q

Who sets out principles for subrogated motor claims that are bases on

A

The ABI Memorandum of Understanding- subrogated motor claims
Based on honesty and transparency

22
Q

What prevents the insured from pursuing recovery rights

A

If an insured signs an agreement with a hold harmless clause

23
Q

Everyone has a duty to act in a reasonable way towards others .A breach of this duty is called

A

Tort

24
Q

Which is the court case insurers took the decision not to pursue their recovery rights against negligent fellow workers

A

Lister v.Romford Ice and cold storage Ltd (1957)

25
Q

Which Clause are usually designed to prevent the insurer from pursuing any subrogation rights it may have against a parent or subsidiary co of the insured

A

Subrogation waiver

26
Q

If the insurer regards the property that is the subject matter of insurance as being beyond economic repair they may offer

A

A total loss settlement

27
Q

Market practice tends towards repairs exceeding ??? Of market value as being uneconomic

A

60%

28
Q

Residual value in the thing insured is termed as

A

Salvage

29
Q

If the insurer meets the loss in full then who is entitled to the benefit of the salvage value

A

Insurer

30
Q

Who made it clear that insured should always be given an opportunity to retain the salvage

A

FOS (financial Ombudsman Service)

31
Q

When insurer retains the salvage who becomes the owner

A

Insurer

32
Q

Under riot compensation act 2016 *RCA) insurer may have rights of recovery against whom

A

The police for riot damage but have only 42 days from the date of the riot to do so

33
Q

Under which agreement insurers will not assist that the insured claims a proportion from each insurer and when

A

PECA ( personal effects contribution agreement )
Where the sum insured is modest , regardless of what the policy conditions actually say