Chapter 10 Flashcards

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1
Q

What is subrogation

A

Right of one person to indemnify another and then recover losses from other indemnity rights

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2
Q

Does subrogation apply to non indemnity policies

A

No

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3
Q

How can subrogation operate?

A

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

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4
Q

Subrogation recovery equal to the loss

A

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

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5
Q

Subrogation recovery greater than the loss

A

Any surplus, the insured is entitled to keep it. The insurer is not entitled to recover more than it has paid.

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6
Q

Recovery from subrogation less than the loss

A

No clear answer on how the money claimed is split.

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7
Q

What are ex gratia payments

A

If the insurer pays out of no legal obligation they are not entitled to subrogate a third party

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8
Q

Sources of subrogation rights

A

Tort
Contract
Statute
Subrogation salvage and abandonment

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9
Q

What are subrogation rights subject to

A

Voluntary market wide agreements between companies (insurers waive there rights as admin costs often make it less effective)

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10
Q

What conditions are satisfied for contribution to arise?

A

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

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11
Q

Simple definition of subrogation

A

The right one person has to indemnify another and then claim the money back from another

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12
Q

Why does the law allow subrogation

A

Prevent double indemnity and claim the loss from the person responsible

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13
Q

Can insurers claim money which the insured receives as a gift for subrogation

A

No as it is intended for the insured

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14
Q

Three main sources of subrogation

A

In tort contract and statute

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15
Q

Escape clause

A

A form of non contribution clause which prevents the insured from having other insurance on the same risk

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16
Q

What is a more specific insurance clause

A

Policy will pay only when cover from a more specific clause has been exhausted It acts a bit like an excess of loss

17
Q

Two main methods for calculation ratio of contribution

A

Maximum and independent

18
Q

Method for calculating ratio of contribution is employed in the case of liability insurance

A

Independent liability