Chapter 10: Subrogation and contribution

Question 1

What is subrogation in the context of insurance?

Answer 1

In the context of insurance, subrogation refers to the right of an insurer who has indemnified an insured in respect of a particular loss (i.e. paid a claim) to recover all or part of the claim payment by taking over any alternative right to indemnity which the insured possesses.

Question 2

What is contribution in the context of insurance?

Answer 2

Contribution is 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.

Question 3

Under what conditions does contribution arise?

Answer 3

Contribution will arise only when the following conditions are satisfied:

• each policy is liable for the loss;
• each insures the same interest in the subject matter;
• two or more policies of indemnity exist;
• each insures the subject matter of the loss; and
• each insures the peril which brings about the loss.