Chapter 10 - Subrogation / Contribution LO9

Question 1

Main purpose of subrogation

Answer 1

Prevent double indemnity

Question 2

What type of policies does subrogation occur in

Answer 2

Indemnity only

Question 3

What is unconscionable conduct?

Answer 3

When the insured gets double recovery and didn’t pay insurer back

Question 4

What can courts do for unconscionable conduct?

Answer 4

Insurers have enforceable equitable lien and can secure injunction compelling policy holder to give money

Question 5

When can insurer claim subrogation?

Answer 5

Only after the claim has been paid to the insured

Question 6

Gifts / voluntary payemtns

Answer 6

Cannot be claimed under subrogation

Question 7

Actions in the name of the insured

Answer 7

• Must be brought in the name of the insured
• If assured does not let insurer use their name then insurer can sue both assured and 3rd party in same action

Question 8

One action only for the whole loss

Answer 8

It must be for the whole loss not a portion which has been borne by the insurers

Question 9

what is duty of assured clause

Answer 9

Requires insured to preserve the insurers subrogation rights

Question 10

Subrogation recovery greater than loss

Answer 10

Insurer entitled to keep it

Question 11

How can insurers recover greater than the loss / Nisbet Principle

Answer 11

Via abandonment and salvage. By way of subrogation they can never recover more than they have paid out

Question 12

Recovery less than loss

Answer 12

May happen when 3rd party becomes insolvent or unable to pay

Due to there being a policy excess

Question 13

What can the insured deduct from insurer

Answer 13

Legal costs or expenses incurred in attempting to recover loss from insured

Question 14

Ex gratia payments

Answer 14

Payments made as a favour and out of the policy terms

Question 15

Sources of subrogation (3)

Answer 15

1. Tort- (mainly negiligence)
2. Contract - (hold harmless clause: used as a release of liability in contract that protects one party) - common in construction, engineering
3. Statute - Right belonging to the insured (Riots compensation act 2016)

Question 16

Differences between subrogation, abandonment and salvage

Answer 16

1. Subro gives insurer right to claim against 3rd party, abandonment and salvage = confer rights of subject matter
2. Subro cannot be brought by insurer’s name, insurer who accets abandonment = owner
3. Insurer can make profit from abandoned property, subro = no greater recovery
4. subro operates auotmatically

Question 17

Denial of subro rights

Answer 17

1. Market agreements
   2.Contractual waiver of subro - people associated with assured
2. Co-insurance

Question 18

Double insurance and contribution

Answer 18

Sharing the loss between insurers so the insured can’t claim double

Question 19

Double insurance motives

Answer 19

Fraud, unintentional, policies overlap

Question 20

Common law rules of contribution (5)

Answer 20

1. Each policy liable for loss
2. Insurers have same interest in subject matter
3. 2+ policies of indemnity must exist
4. insures the subject matter of the loss
5. Insures the peril that causes loss

Question 21

Maximum liability method

Answer 21

Loss is shared by insurers in proportion to max cover that is available
work % split then x by loss