Chapter 8: Contribution and Subrogation Flashcards
What is contribution?
The right of the insurer to recover part of a claim where two or more insurers cover the same subject matter.
What is the rateable proportion calculation by sum insured?
(sum insured / total sum insured) * loss
What is the rateable proportion calculation by independent liability calculation?
Calculates liability aa though no other insurer is covering the risk:
(policy sum insured / total value at risk) * loss
What is a non-contribution clause?
States that the policy will not cover a claim which is covered by any other policy.
How does a more specific insurance clause work in respect of contribution.
Excludes any claims that are covered by a more specific policy.
Define subrogation.
Once the insurer has paid the claim, they are allowed to then seek indemnity from the third party responsible for the loss.
What did Yorkshire Insurance Co v. Nisbet Shipping establish?
An insurer is not eligible to claim back more than they paid out.
What are the rights of the insurer regarding salvage?
So long as the insured has been paid in full, the insurer has the right to the salvage value.
When might an insurer not exercise subrogation rights?
- Where they have waived the right
- In a benefit policy
- In the event of a negligent fellow employee (it is generally accepted as too harsh)
What are the rights of the insured regarding salvage?
The insured must be given the option to retain the salvage. The insurer will then seek to reclaim the difference from the third party responsible.
