Page 219 - Fire Insurance Ebook IC 57

The Insurance Times

n Rather he will receive a rateable proportion from each policy
being to the sum insured.

n This is to preserve the principle of indemnity so that the insured
cannot make profit out of loss.

Subrogation

n Subrogation means that the insured's rights of recovery of loss
from a third party responsible for the loss are transferred to the
insurers who may recover the loss from the party concerned.

n If the insured recovers the whole or part of his loss from a third
party responsible for the loss, then to that extent the indemnity
payable by the insurers is reduced.

n Subrogation takes places even before indemnification by the
insurer. This is considered necessary to enable the insurers to act
quickly in proceeding against the third parties, and to ensure that
their rights of recovery against third parties are not barred by any
law of limitation.

Pro-rata average

n If there is under-insurance, the amount of claim is proportionately
reduced.

n Under condition of Pro rata Average Clause the insured is penalised
for not insuring the property on full value. So he has to bear a part
of the loss.

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