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

Subrogation is the legal right of the insurer to pursue a third party that caused an insurance loss to the insured, after paying the insured's claim.

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

California's made whole doctrine requires that the insured fully recover all their losses before the insurer can collect any subrogation recovery from the third-party proceeds.

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 waiver of subrogation prevents the insurer from recovering losses from a named party, often required in construction contracts to protect general contractors.

Question 4

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

Accepted Answer

3 years

Answer

Under California Code of Civil Procedure § 338, the statute of limitations for property damage claims, including subrogation, is three years from the date of loss.

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

If the insured settles with and releases the at-fault party before the insurer recovers its subrogation interest, it can extinguish the insurer's recovery rights.

(CA) Certified Adjuster Designation Practice Test

(CA) Certified Adjuster Designation Practice Test

CA CA Subrogation & Recovery Procedures