Chapter 10 - Subrogation And Contribution Flashcards
When might the insured be able to claim more than once for the same loss
If they have more than one insurance policy covering the loss.
If they have a claim and one insurance policy but can also make a claim for compensation against another person
If a house owner did obtain compensation from a plumber after receiving an insurance claim payout what would they have to do with the money
They would have to pass the money to their insurance company
What is the main purpose of subrogation
To prevent what is known as the unjust enrichment of the insured. In other words to prevent him from unfairly profiting from their loss and so to preserve the principle of indemnity
Does subrogation apply to non-indemnity contracts or indemnity contracts
Only indemnity policies
In subrogation when someone has succeeded in recovering from the same loss twice what Karen insurer get to require the money is paid over
And injunction
When an action is taken by insurers in the name of the insured how much the loss is it for
The whole loss not just a portion
When an action is taken by insurers in the name of the insured why does it have to be a Holos at once
The law only allows a person to sue went for a wrongful act that has been committed against them
A common law what must the insurers do before they exercise subrogation rights
They must indemnify the insured (pay the claim)
The operation of the principle of subrogation, and the way in which any recovery from a third-party is shared between the insured and the insurers, depends on what two factors
The amount of the recovery in relation to the loss.
Whether the insurance covers the loss in full
If recovery is equal to the loss what does this mean
The amount of the recovery from the third-party will be exactly the same loss suffered by the insured. In this case the position is straightforward and no problem about sharing the money recovered as the Whole loss will be borneby the third party
What happens if the recovery is greater than the loss
If there’s any surplus after the insurance have recovered and money the insured is entitled to keep it. Again, the insurer is not entitled to recover more than is paid out
The insurer may be able to recover more than they have paid out under what doctrine
Abandonment and salvage
What is an ex Gracia payment
A payment outside the terms of the policy, making it clear that no legal obligation to pay is accepted, and payment is made merely as a favour
Is the insured entitled to retain any of the amount secured by ex gratia payment
Yes
What ways do subrogation rights most frequently arise
In tort. Examples the third-party will have negligently damage property belonging to the insured which is covered under the latters property insurance
How will subrogation rights usually be founded on
On the tort of negligence
What is it an example of
Property insurers who pay a claim for damage to buildings may have rights of recovery against the tenant of the insured, who is legally responsible for the damage on the terms of the lease
Subrogation under contract
How do you marine insurers have a subrogation rights
Under contract they pay shippers for damage to cargo against the carrier that arise in the contract of carriage
How can subrogation rights in contract arise from indemnity clauses
Well there are hold harmless agreement where a contract in place a contract A agreed to back payback contract B should B suffer a particular type of loss
On the doctrine of subrogation what is recovery by statute for the riot damages act
The right passes to insurers and is enforceable by them claim for riot damage and is enforceable by them against the polishing body in the district in which the riot occurs
What does the right damages act allow
The insurers to sure the relevant authority in their own name
Why wouldn’t an insurer exercise their right to subrogation
Market agreements
Contractual waiver of subrogation
Co-insurance cases
Public policy
Under the modification of subrogation rights what are market agreements
General agreement between insurance companies. So insurers agree to waive the right to Subrogation against third parties. This is particularly common by the third-party is insured
For a market agreement why won’t an insurer tend to claim their subrogation rights against another insurance company when the third-party is covered by their own liability insurance
The consequence that is what insure all end up claiming from another. This can result in extra admin costs and possibly wasteful litigation between the two insurers if They can’t agree on who is to blame
What are knock for knock agreements
Mostly found in motor insurance
When an accident occurs involving vehicles covered by different insurers, each insurer pay for damage to its own policy holders vehicle and gives up any subrogation rights that may exist against the other motorist.
In what circumstances do insurers not pursue rights of recovery against others
People who negligently injure their fellow employees. Following the Lister v Romford case
What is the contractual waiver of subrogation clause
Wait insurers agree the particular insured that they will not exercise subrogation rights against certain other parties who are associated with the insured. This could be affiliated or subsidiary companies of the policyholder
How do you insurance give up their superation rights under public policy
On the Lister versus Romford insurers have January agreed to give up their subrogation rights against negligent workers who injure their follow employees in the course of employment
What is contribution
Contribution is the right of an insurer to call upon of a similarity, but not necessarily equally liable to the same insured, to share the cost of an indemnity payment
Contribution is often further modified by what between insurers
Market agreements
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.
Each insures a peril which belongs to the loss.
In contribution does the subject matter have to be exactly the same when there is two or more policies
No
In contribution if the insured chooses only go to one insurer and recover in full from that insurer. what can the insurer do
The insurer who pays my den, and only then, claim a contribution from the other insurer
What is a contribution condition
Sets out how the loss is to be met if the insured has another policy which covers it. The effect of the condition will be to change or override the common law rules described above
What is an escape clause
Is a condition that effectively forbids insured from taking out another policy without the consent of the insurers
What is the original purpose of an escape clause
Prevent the insured from secretly arranged double multiple insurances and so guard against possible fraud
What is a non-contribution clause
May not prohibit other insurances being arranged without consent in the way described, but simply state there will be no liability for any loss which is insured by no policy
What is a more specific insurance clause
Where the loss is covered by a more specific insurance, the policy will respond only when the cover is provided by the more specific insurance has been exhausted
What is maximum liability method
The losses shared by their insurers in proportion to the maximum amount of cover that is available into each policy which, in the case of property insurance is usually equivalent to the sum insured
What is independent liability method
The liability of each insurer for the particular loss which has occurred is assessed as though its policy with only one in force. The figure that results in each case represents the independent liability of the insurer for the loss. The losses and shared in proportion to the independent liabilities of the two insurer
In a property insurance if the subject matter of insurance is identical what method of contribution would you use
The maximum liability method
In property insurance and if the case of policy is that the subject to average or where the lower loss limit applies within a greater sum insured what method of contribution would you use
Independent liability method
What is now classed as a proper basis for the calculation of contribution in the case of liability insurance
Independent liability method
How can market agreements between insurers modify the application of contribution itself (two ways)
Insurers may agree to share the losses in cases where, strictly speaking, contribution does not arise in law.
They may sometimes agree to waive rights of contribution in cases where such a right clearly exists, so that the whole of the loss is borne by one insurer
What is the purpose of a market agreement
Prevent disputes between insurers and reduce operating costs
Why does the law allows subrogation
To prevent the Fingest enrichment of the insured and preserve the principle of indemnity
Can insurers claim money which the insured received as a gift by the way of subrogation
Where the person who give some money in tens it to be for the sole benefit of the insured it cannot be claimed by the way of subrogation
What are the three main sources of subrogation rights
In tort in contract or under statue
In what circumstances would the maximum liability not be used
If one policy provides unlimited cover as in the case of liability insurance is the method would not work at all
