CALA Subrogation and Recovery in Auto Claims Flashcards
6 cards from real CALA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 CALA Subrogation and Recovery in Auto Claims flashcards as text
What is a 'Mary Carter' agreement and its impact on subrogation?
Answer: A secret settlement between a plaintiff and one defendant that can affect remaining defendants' liability
A Mary Carter agreement is a confidential settlement where one defendant reduces their liability in exchange for helping the plaintiff against other defendants, which can complicate subrogation recovery.
What is 'equitable subrogation' as opposed to 'conventional subrogation'?
Answer: Equitable subrogation arises by operation of law; conventional subrogation arises by contract
Equitable subrogation is a right that courts impose by law to prevent unjust enrichment, while conventional subrogation is expressly created by the terms of the insurance contract.
Why must a CALA adjuster document salvage value when handling a total loss subrogation case?
Answer: Salvage value reduces the insurer's net subrogation recovery amount
Salvage proceeds received by the insurer reduce the net loss paid, and the subrogation demand must reflect the actual net payment to avoid over-recovery.
What is the significance of a 'reservation of rights' letter in relation to subrogation?
Answer: It notifies the insured that the insurer is investigating coverage while preserving its defenses
A reservation of rights letter allows the insurer to pay a claim while preserving the right to dispute coverage or assert defenses, including subrogation rights, without waiving them.
What does 'pro rata' subrogation sharing mean in a partial recovery situation?
Answer: Recovery is shared proportionally between the insurer and insured based on their respective loss amounts
Pro rata sharing divides a partial subrogation recovery between the insurer and insured in proportion to what each lost, ensuring a fair distribution when full recovery is impossible.
In which situation would an insurer most likely waive its subrogation rights voluntarily?
Answer: When the at-fault party is uninsured and has no assets to recover from
An insurer may choose to waive subrogation when the at-fault party is judgment-proof (uninsured, no assets), making pursuit of recovery economically impractical.