Module 6 Flashcards
Max’s comprehensive motor insurance policy contains a personal accident section which provides a payment of £5,000 to Fiona in the event of his death in a road accident. Fiona has also arranged a separate personal accident policy which provides a £20,000 death benefit if either of them dies in an accident.
How much would you expect Fiona to recover under these policies following Max’s death in a road accident?
A. £15,000
B. £20,000
C. £25,000
C. £25,000
‘the right of an insurer to call upon others similarly, but not necessarily equally, liable to the same insured to share the cost of an indemnity payment’
What fits this definition
A. Contribution
B. Indemnity
C. Average
D. Subrogation
A. Contribution
Sharna has a home insurance policy covering the contents of her house. Some of her jewellery is insured separately under an ‘all risks’ policy with a different insurer.
In the event of some jewellery being stolen would you expect that:
A. contribution will apply because there is an overlap of cover between the two policies
B. contribution will not apply because the subject matter of the two policies is not identical
A. contribution will apply because there is an overlap of cover between the two policies
The ‘subject matter’ which is affected by the loss must be common to both policies, but it is not necessary for the policies to cover exactly the same subject matter for contribution to apply in principle.
Zoe’s tenant, Danny, insures his personal possessions against loss by theft. Zoe’s policy on the property also covers the contents against loss by theft. A theft occurs at the property and some of Danny’s possessions are stolen.
Would you expect his insurer to have a valid claim for contribution from Zoe’s insurer in these circumstances?
A. Yes
B. No
B. No
For contribution to apply, there must be a ‘common interest’ insured by the two policies. In our example, the insurable interests of the two parties are clearly different and no right of contribution would arise.
Millie has two motor insurance policies in force covering damage to her car. Both policies contain a contribution clause, stating that, in the event of dual insurance, the insurer will only pay a rateable proportion of any loss.
If a damage claim arises, how would you expect it to be handled?
A. One insurer will pay all of the claim and recover a suitable proportion from the other insurer
B. Millie will have to claim the rateable proportion from each insurer
C. Both policies will be void and Millie will have to pay for repairs herself
B. Millie will have to claim the rateable proportion from each insurer
‘The right of one person, having indemnified another under a legal obligation to do so, to stand in the place of that other and avail himself of all the rights and remedies of that other, whether already enforced or not.’
What fits this definition
A. Contribution
B. Indemnity
C. Average
D. Subrogation
D. Subrogation
Alex is sitting in his car at a set of traffic lights when he is run into from behind by Vicky. Vicky does not want to lose her no claims bonus and gives Alex a cheque for £200 to cover the cost of repairing his car. Alex then claims under his comprehensive motor policy and his insurer pays the final repair bill of £200.
What would you suggest is the correct position here?
A. Alex can keep Vicky’s £200 and his insurer has no right of recovery
B. Alex must pass the £200 recovered from Vicky to his insurer
C. Alex can keep Vicky’s £200 but his insurer has a further right of recovery for this amount against Vicky
B. Alex must pass the £200 recovered from Vicky to his insurer
Under common law, at what stage in proceedings do you think that Alex’s insurer will be able to begin its subrogation action against Vicky?
A. As soon as it is notified of the claim by Alex
B. Only when it has provided an indemnity under the policy by paying Alex’s claim
B. Only when it has provided an indemnity under the policy by paying Alex’s claim
A breach of your common law duty to act in a reasonable way towards others (a civil wrong). If you commit this it may give the person who has suffered injury or damage as a result of your wrongdoing the right to claim compensation.
The above statement describe one of four ways subrogation rights. Which is it describing:
A. Under statute
B. Through the subject matter of insurance
C. In tort
D. Under contract
C. In tort
A landlord makes a claim for damage under his fire policy and also recovers the cost of repairs from his tenant, who is legally responsible for any such damage under the terms of his lease. The insurer would be entitled to the benefit of the landlord’s recovery from the tenant.
The above statement describe one of four ways subrogation rights arise. Which is it describing:
A. Under statute
B. Through the subject matter of insurance
C. In tort
D. Under contract
D. Under contract
Under the Riot (Damages) Act 1886, an insurer is empowered to recover from the local police authority any claim payment it makes to an insured for riot damage. The insurer can claim in its own name in these circumstances. Under the terms of the Riot Compensation Regulations 2017 (as amended by the 2018 Regulations), claims need to be brought within 43 days of the date of the riot. The previous timescale of 14 days under the Riot (Damages) Act 1886, was increased following the practical issues arising from the 2011 riots in the UK.
The above statement describe one of four ways subrogation rights arise. Which is it describing:
A. Under statute
B. Through the subject matter of insurance
C. In tort
D. Under contract
A. Under statute
This arises where the insurer deals with a claim (e.g. for damage to a car) on a ‘total loss’ basis. Having paid a full indemnity to the insured, the insurer assumes ownership of any ‘salvage’ remains, which it can sell for its own benefit. If the insured received the salvage benefit, they would receive more than a full indemnity.
The above statement describe one of four ways subrogation rights arise. Which is it describing:
A. Under statute
B. Through the subject matter of insurance
C. In tort
D. Under contract
B. Through the subject matter of insurance
Sam’s car is damaged in an accident which is caused by another driver not looking when he turned out of a side road. Sam claims the cost of repairing his car under his own motor policy and his insurer seeks to recover its outlay from the other driver.
This is an example of subrogation rights arising:
A. in tort
B. under contract
C. under statute
A. in tort
Under what circumstances, if any, can an insurer pursue a subrogation action in its own name?
A. None, the action must always be taken in the name of the insured
B. If the right arises under contract
C. If the right arises under statute, as a result of riot damage
C. If the right arises under statute, as a result of riot damage
Joey has recently purchased a delicatessen, comprising a retail shop and an outbuilding used as a smokehouse and for storage. He insures the buildings against fire damage under a single policy with a total sum insured of £250,000. The outbuilding is destroyed by fire and the cost of re-building is assessed at £50,000. The loss adjuster handling the claim comments in his report that the actual value of property at risk is £500,000.
What do you think Joey’s insurer should pay towards the claim?
A. Nothing
B. £25,000
C. £50,000
B. £25,000
