Ch : 8 Contribution And Subrogation

Question 1

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

Answer 1

Contribution condition

Question 2

Definition of contribution

Answer 2

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

Question 3

How contribution arises

Answer 3

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

Question 4

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

Answer 4

Contribution

Question 5

Contribution principle was established in the case of

Answer 5

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

Question 6

What is rateable proportion

Answer 6

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

Question 7

Ways of determining rateable proportion of claim

Answer 7

1.By sum insured
2.By independent liability

Question 8

Rateable proportion formula * Sum insured )

Answer 8

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

Question 9

What is independent liability method

Answer 9

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

Question 10

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

Answer 10

Policy sum insured ÷ total value at risk × loss

Question 11

Non contribution may be worded as

Answer 11

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

Question 12

Definition of subrogation

Answer 12

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

Question 13

Subrogation rights may arise in 3 ways

Answer 13

1.Tort
2.Contract
3.Statue

Question 14

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

Answer 14

Riot ,civil commotion and malicious damage

Question 15

When can insurer can offer total loss settlement

Answer 15

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

Question 16

When it’s considered uneconomic

Answer 16

If repair exceeding 60% of market value

Question 17

Hold harmless clause

Answer 17

Prevents the insured from pursuing recovery rights

Question 18

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

Answer 18

Contribution

Question 19

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

Answer 19

A tort

Question 20

Which policy do not have subrogation rights

Answer 20

Benefit policy

Question 21

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

Answer 21

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

Question 22

What prevents the insured from pursuing recovery rights

Answer 22

If an insured signs an agreement with a hold harmless clause

Question 23

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

Answer 23

Tort

Question 24

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

Answer 24

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

Question 25

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

Answer 25

Subrogation waiver

Question 26

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

Answer 26

A total loss settlement

Question 27

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

Answer 27

60%

Question 28

Residual value in the thing insured is termed as

Answer 28

Salvage

Question 29

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

Answer 29

Insurer

Question 30

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

Answer 30

FOS (financial Ombudsman Service)

Question 31

When insurer retains the salvage who becomes the owner

Answer 31

Insurer

Question 32

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

Answer 32

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

Question 33

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

Answer 33

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