Chapter 10 Flashcards
What is subrogation
Right of one person to indemnify another and then recover losses from other indemnity rights
Does subrogation apply to non indemnity policies
No
How can subrogation operate?
The insured could recover the same loss twice (insurer and faulty party) and the insurer can then have an injunction so the insured pays it back.
The insurer can bring action against the third party but it must be for the whole loss not the part covered by the insured. This can be paid to the insured
Subrogation recovery equal to the loss
This makes it easy to share as the whole loss will be borne by the third party. Excess recovered is passed on to insured and other remains with insured
Subrogation recovery greater than the loss
Any surplus, the insured is entitled to keep it. The insurer is not entitled to recover more than it has paid.
Recovery from subrogation less than the loss
No clear answer on how the money claimed is split.
What are ex gratia payments
If the insurer pays out of no legal obligation they are not entitled to subrogate a third party
Sources of subrogation rights
Tort
Contract
Statute
Subrogation salvage and abandonment
What are subrogation rights subject to
Voluntary market wide agreements between companies (insurers waive there rights as admin costs often make it less effective)
What conditions are satisfied for contribution to arise?
Each policy is liablee
Each insured the same interest in the subject matter
Two or more policies of indemnity exist
Each insured the peril which brings the loss
Simple definition of subrogation
The right one person has to indemnify another and then claim the money back from another
Why does the law allow subrogation
Prevent double indemnity and claim the loss from the person responsible
Can insurers claim money which the insured receives as a gift for subrogation
No as it is intended for the insured
Three main sources of subrogation
In tort contract and statute
Escape clause
A form of non contribution clause which prevents the insured from having other insurance on the same risk
