Chapter 10 Key Points Flashcards
corollaries of indemnity
subrogation and contribution
apply automatically to insurances which are contracts of indemnity and apply only to contracts of indemnity
what does the way in which recovery from a third party is shared between insured and insurers depend on
the amount of the recovery in relation to the loss
whether the insurance covers the loss in full
how can subrogation rights arise
tort
in contract
under statute
how can insurers’ subrogation rights be modified/restricted
market agreements
contractual waivers
coinsurance cases
matter of public policy
what is contribution
the right of an insurer to call upon others similarly, but not necessarily equally liable to the same insured, to share the cost of an indemnity payment
what is contribution governed by
common law rules, however these rules are frequently modified by clauses in the policy known as contribution conditions
conditions for contribution
two or more policies of indemnity exist
each insures the subject matter of the loss
each insures the peril which brings about the loss
each insures the same interest in the subject matter
each policy is liable for the loss
what is a contribution condition
a clause that sets out how the loss is to be met if the insured has another policy which covers it
types of contribution conditions
escape clauses
non-contribution clauses
‘more specific insurance’ clauses
‘rateable proportion’ clauses
what are the two main methods of calculating the ratio of contribution
the maximum liability method
the independent liability method
how can market agreements between insurers modify the application of the contribution
insurers may agree to share losses in cases where contribution does not arise in law
insurers may agree to waive rights of contribution in cases where such a right exists, so that the whole loss is borne by one insurer
