Chapter 10 - New Questions

Question 1

In which situation would a life insurance company have no subrogation rights?

Answer 1

When the policyholder’s death is caused by a third party’s negligence.

Question 2

Under what circumstance can an insurer claim money from a gift received by the insured after suffering a loss?

Answer 2

When the gift was intended for the sole benefit of the insured and not related to the insurance claim.

Question 3

What happens if an insured does not allow the insurer to use their name in an action against a third party?

Answer 3

The insurer can sue the insured and the third party in the same action.

Question 4

According to the principle of subrogation, how many times can a person sue for a wrongful act that has been committed against them?

Answer 4

Only once for the whole loss.

Question 5

Why might insurers include a ‘duty of assured’ clause in a policy?

Answer 5

To prevent the insured from prejudicing the insurer’s subrogation rights.

Question 6

What happens if the recovery from a third party exceeds the amount of the loss suffered by the insured?

Answer 6

The insured is entitled to keep the surplus after the insurer has been paid back.

Question 7

What is a key difference between subrogation and assignment in the context of insurance claims?

Answer 7

Subrogation occurs automatically, while assignment requires an agreement.

Question 8

In the case of Napier v. Hunter (1993), what was the court’s decision regarding recovery when the insurer has paid less than the full loss?

Answer 8

The insurer can keep the entire recovery even if it does not cover the full loss.

Question 9

In North of England Iron Steamship Insurance Association v. Armstrong (1969–70), why did the court rule that the insurer could keep the entire recovery amount?

Answer 9

The insured’s valuation of the ship was deemed irrelevant to the case.

Question 10

Which branch of law most frequently gives rise to subrogation rights?

Answer 10

Tort law

Question 11

In the context of subrogation, what is an example of a tort other than negligence?

Answer 11

Nuisance

Question 12

In the case of subrogation involving indemnity clauses, what type of agreements are typically involved?

Answer 12

Knock for knock agreements

Question 13

In Lister v. Romford Ice and Cold Storage Ltd (1957), what unusual aspect of subrogation was highlighted?

Answer 13

The case involved a unique contract-based subrogation scenario

Question 14

What is a primary difference between subrogation and abandonment/salvage rights?

Answer 14

Subrogation allows recovery for the insurer’s payment, while abandonment/salvage rights give rights over the subject matter itself.

Question 15

In which situation can subrogation not be exercised by the insurer in their own name?

Answer 15

Generally, except in one specific exception

Question 16

Which of the following is a common market agreement that affects subrogation rights?

Answer 16

‘Knock-for-knock’ agreements

Question 17

In the case of Lister v. Romford Ice and Cold Storage Ltd (1957), what was a significant outcome regarding subrogation rights?

Answer 17

The court allowed the insurer to pursue subrogation against the negligent employee.

Question 18

Under what condition might a court assume that subrogation rights are barred due to a business contract?

Answer 18

If the contract states that property is ‘at the sole risk of’ one party.

Question 19

Under what condition is subrogation against a co-insured usually denied?

Answer 19

When the insurer has indemnified the co-insured for the loss

Question 20

When might subrogation against a co-insured be allowed?

Answer 20

When the co-insured ceases to be covered by the insurance

Question 21

Which case illustrates the principle that subrogation rights may be denied on public policy grounds to avoid harming industrial relations?

Answer 21

Morris v. Ford Motor Co.

Question 22

What must be true about the subject matter of the insurance policies for contribution to be applicable?

Answer 22

The policies must be issued by the same insurer.

Question 23

What does not constitute double insurance that would lead to contribution?

Answer 23

Two policies covering different risks for the same property.

Question 24

What effect does a contribution condition in an insurance policy have?

Answer 24

It changes or overrides the common law rules of contribution.

Question 25

In the case of Gale v. Motor Union Insurance Co. (1928), what was the court’s decision regarding the non-contribution clauses in the policies?

Answer 25

The court decided that the loss should be shared equally between the two insurers.

Question 26

What does a typical excess of loss clause state regarding additional insurance coverage?

Answer 26

The policy will cover any loss that exceeds the amount covered by the primary insurance.

Question 27

In the case where both insurance policies have similar excess of loss clauses, what is the likely outcome?

Answer 27

The clauses will cancel each other out, leaving no coverage.

Question 28

What is a key limitation of the maximum liability method?

Answer 28

It does not account for different ranges of coverage between policies.

Question 29

Which method is more commonly used in practice for calculating contribution in double insurance cases?

Answer 29

Market practice often overrides the methods.

Question 30

In property insurance where policies are not subject to average and the property covered is identical, which method is typically used for calculating contribution?

Answer 30

Maximum liability method

Question 31

If two property policies are not concurrent and the subject matter of insurance is not identical, what method is often used for calculating contribution?

Answer 31

Mean method

Question 32

In which type of market agreement might insurers agree to share losses even if, according to legal principles, contribution does not arise?

Answer 32

Claims sharing agreement

Question 33

Which type of market agreement involves waiving rights of contribution so that the whole loss is borne by one insurer?

Answer 33

Waiver of contribution rights

Question 34

In the motor insurance market, which agreement specifies that the insurers of the vehicle involved in an accident will not seek contribution from the driver’s own insurers?

Answer 34

Waiver of contribution rights