CALA Subrogation & Recovery 2

Question 1

Under which circumstance is an insurer generally NOT entitled to pursue subrogation?

Accepted Answer

The loss was caused by the insured's own negligence

Answer

Subrogation requires a responsible third party; if the loss was caused by the insured's own negligence, there is no third party to subrogate against.

Question 2

What is 'contribution' in the context of insurance recovery?

Accepted Answer

The right of an insurer that has paid a claim to seek reimbursement from other insurers covering the same loss

Answer

Contribution allows an insurer that has paid more than its proportionate share of a loss to recover the excess from other insurers that also covered the same risk.

Question 3

Which element is NOT required to establish a valid subrogation right?

Accepted Answer

The third party must be insolvent

Answer

Third-party insolvency is not a requirement for subrogation; however, it may affect the practical ability to recover funds.

Question 4

A 'waiver of subrogation' clause in a contract typically benefits which party?

Accepted Answer

The third party identified in the contract

Answer

A waiver of subrogation clause in a contract protects the identified third party (e.g., a contractor or tenant) by preventing the insurer from recovering against them after paying a claim.

Question 5

What is the most common method used to apportion a subrogation recovery between the insurer and the insured when the insured had an uninsured loss (e.g., a deductible)?

Accepted Answer

Pro-rata apportionment based on respective losses

Answer

Many courts and insurers use pro-rata apportionment, dividing the recovery proportionally based on the insurer's payment versus the insured's uncompensated loss.

(CALA) Certified All-Lines Adjuster Practice Test

(CALA) Certified All-Lines Adjuster Practice Test

CALA Subrogation & Recovery 2