Contribution Flashcards
When does the right of contribution arise?
The right of contribution arises where the property is insured with more than one insurance company and an insured event causes loss which is valued at less than the combined amount of the policies. Prima facie, the insured may recover from any one insurer the whole amount insured by it, but there is usually a clause in the insurance contract to the effect that each insurer shall be liable to contribute rateably only (“ a rateable contribution clause”).
What happens if the insurer pays out more than his rateable share of the loss?
If an insurer pays out more than his rateable share of the loss he has a right to recover (by implication of law and without any assignation from the insurer) the amount he paid out above his share from the other insurers: Sickness and Accident Insurance Association Ltd. v General Accident Assurance Corporation Ltd. (1892)
