Chapter 10 Questions

Question 1

why does the law allow subrogation

Answer 1

to prevent the double indemnity of the insured and to ultimately claim the loss from the person who is responsible for its occurrence

Question 2

what is an escape clause

Answer 2

form of non-contribution clause
prevents the insured from having other insurance on the same risk
policy is avoided if the insured takes out further insurance or already has other insurance when the policy is opened

Question 3

what is a ‘more specific insurance’ clause

Answer 3

policy will pay only when the cover provided by another more specific insurance has been exhausted, operates like an excess of loss insurance

Question 4

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

Answer 4

the independent liability method

Question 5

The insured has had a claim settled for £2,500 after an agreed excess of £300 was deducted. Through subrogation, the insurer successfully recovers £1,500 of the claim. How much, if any, would typically be returned to the insured

Answer 5

none

Question 6

A property is insured with insurer A for £10,000 and insurer B for £15,000 and there is a loss of £13,500. Using the independent liability method of establishing contribution, how much will insurer B pay, assuming neither policy is subject to averaging?

Answer 6

7755

Question 7

What impact would an ‘escape’ clause have on the insured

Answer 7

It prohibits the insured from having another insurance policy without the agreement of the first insurer.