CALA Subrogation & Recovery

Question 1

What is the primary legal doctrine that allows an insurer to pursue a third party responsible for an insured's loss after the insurer has paid the claim?

Accepted Answer

Subrogation

Answer

Subrogation is the legal right by which an insurer, after paying a loss, steps into the shoes of the insured to recover damages from the responsible third party.

Question 2

Which of the following actions by an insured would most likely impair an insurer's subrogation rights?

Accepted Answer

Releasing the negligent third party from liability before the insurer is notified

Answer

If the insured releases the responsible third party from liability without the insurer's consent, this act can bar the insurer from pursuing subrogation recovery.

Question 3

Under the 'make whole' doctrine applied in many states, when can an insurer pursue subrogation recovery?

Accepted Answer

Only after the insured has been fully compensated for all losses

Answer

Under the make whole doctrine, the insurer cannot pursue subrogation until the insured has been fully compensated for all of their losses, including uninsured amounts.

Question 4

Which type of subrogation arises by operation of law rather than by contract?

Accepted Answer

Equitable subrogation

Answer

Equitable subrogation arises by operation of law based on fairness principles, without requiring a specific contractual provision.

Question 5

What is the statute of limitations concern most critical when evaluating a subrogation claim?

Accepted Answer

The deadline by which the insurer must file suit against the responsible party

Answer

The statute of limitations sets the deadline by which the insurer must initiate legal action against the responsible third party or lose the right to recover.

(CALA) Certified All-Lines Adjuster Practice Test

(CALA) Certified All-Lines Adjuster Practice Test

CALA Subrogation & Recovery