Page 182 - W01TB8_2017-18_[low-res]_F2F_Neat

viii W01/March 2017 Award in General Insurance

Chapter 8 self-test answers

1. Contribution is the right of an insurer to call upon other insurers similarly, but not necessarily
equally, liable to the same policyholder to share the cost of an indemnity payment.
2. • Two or more policies of indemnity must exist.
• The policies must cover a common insurable interest.
• The policies must cover a common peril which gives rise to the loss.
• The policies must cover common subject-matter.
• Each policy must be liable for the loss.
• Neither policy must contain a non-contribution clause.
3. Contribution applies only when there is a common interest in the subject-matter of insurance.
4. At common law.
5. By sum insured and independent liability.
6. The principle of indemnity.
7. Only paid claims can be covered. Only the amount of the paid claim can be recovered.
8. Under tort, contract and statute.
9. The policyholder cannot claim the salvage once an insurer has settled the claim for a total loss
amount unless the insurer agrees to an appropriate reduction in the claim settlement figure. The
value of sales proceeds from the salvage belong to the insurer.
10. Insurers are precluded from exercising subrogation rights when:
• the insured has no rights;
• under benefit policies;
• when the policy contains a subrogation waiver, e.g. in commercial insurance to prevent the Reference copy for CII Face to Face Training
exercising of subrogation rights arising against a subsidiary; and
• when the subrogation rights are against a negligent fellow employee in employers’ liability
insurance. (This is accepted industry practice except in extreme circumstances.)