Contribution Flashcards
Defined contribution
When two or more insurers cover the same risk, they share the loss so the client is indemnified
What must both policies have for contribution to apply?
The policy must cover the same risk, have the same insurable interest and have the same rights and interests
Who can the insured submit a claim to
One or all of the insurers
How do insurers seek contribution
One pays in full then goes to the others looking for contribution
What clause do most insurance contracts have in them?
If another insurer covers the risk then they must payout instead of them. If both policies have this then they cancel each other out.
Where does contribution not apply and why
Life insurance as it is not a contract of indemnity
What case give the common law basis for contribution
Godin v london assurance co. [1758]
Where does the statute for contribution come from?
Marine insurance act section 80
What are the 2 methods of contribution?
Maximum liability and independent liability approach
What is the most common form of contribution calculation
Average, but insurers prefer whatever one gives them less liability
What case law sets precedent for the contract having to have the same subject matter/insurable interest for contribution?
North British and mercantile v London Liverpool and globe insurance (1877)
Why did contribution not apply in Zurich v shield?
The interest was not the same rights an interests
What did the Andrews v patriotic assurance co . Case decide
The policies must be effected or by the same insured
Do all policies have to be in place at the time of the loss? What case sets president for this
Yes, Sickness and accident insurance v general accident insurance corp 1892
Where might you see instances of double insurance
- Stupidity
- Travel and gadget insurance
- All risk policy and home contence
