CA CA Subrogation & Recovery Procedures

Question 1

Subrogation in insurance allows the insurer to:

Accepted Answer

Step into the insured's shoes to recover losses from a negligent third party

Answer

Cancel the insured's policy after a large claim

Answer

Increase premiums following a paid claim

Answer

Require the insured to pursue the responsible party personally

Question 2

Under California law, the insured must be made whole before the insurer can exercise subrogation rights. This is known as the:

Accepted Answer

Made whole doctrine

Answer

Primary payor rule

Answer

Comparative fault principle

Answer

Indemnity exclusion

Question 3

What is a 'waiver of subrogation' clause in an insurance policy?

Accepted Answer

A clause where the insurer agrees not to pursue recovery against a specified third party

Answer

A clause allowing the insured to sue the insurer

Answer

A clause that voids coverage if the insured is negligent

Answer

A clause extending the policy's statute of limitations

Question 4

California's statute of limitations for a subrogation lawsuit based on property damage is generally:

Accepted Answer

3 years

Answer

1 year

Answer

2 years

Answer

4 years

Question 5

Which of the following actions by the insured can impair the insurer's subrogation rights?

Accepted Answer

Signing a release with the responsible third party before the insurer is reimbursed

Answer

Filing a timely proof of loss

Answer

Cooperating fully with the adjuster's investigation

Answer

Providing all relevant documents to the insurer

Question 6

What is the primary purpose of a 'lien letter' sent by an insurer to a third-party tort defendant?

Accepted Answer

To assert the insurer's subrogation interest and notify the defendant of the claim

Answer

To place a lien on the defendant's real property

Answer

To initiate a lawsuit in civil court

Answer

To request the defendant's insurance policy limits