CCP Subrogation Recovery Process 2 — Questions and Answers
Question 1: Which doctrine bars subrogation recovery when the insured has not been made whole by the insurance payment?
- Made Whole Doctrine (Correct answer)
- Collateral Source Rule
- Comparative Fault Doctrine
- Equitable Contribution Doctrine
Correct answer: Made Whole Doctrine
The Made Whole Doctrine prevents an insurer from pursuing subrogation until the insured has been fully compensated for all losses, including uninsured portions.
Question 2: When two insurers cover the same loss and one pays, what legal right allows the paying insurer to seek contribution from the other?
- Equitable Contribution (Correct answer)
- Subrogation Waiver
- Assignment of Rights
- Indemnity Demand
Correct answer: Equitable Contribution
Equitable contribution allows an insurer who paid more than its proportionate share to recover the excess from co-insurers covering the same risk.
Question 3: A subrogation claim is filed three years after the loss date, but the applicable statute of limitations is two years. What is the most likely outcome?
- The claim is time-barred (Correct answer)
- The insurer may still recover under equitable tolling in all jurisdictions
- The tortfeasor waives the defense if they didn't raise it immediately
- The insurer's rights reset when the insured was paid
Correct answer: The claim is time-barred
A claim filed after the statute of limitations has expired is time-barred, and the defendant can assert this as a complete defense.
Question 4: Which method of calculating the statute of limitations for subrogation begins running from the date of the insurer's payment to the insured?
- Discovery Rule
- Payment Rule (Correct answer)
- Accrual-at-Loss Rule
- Demand Rule
Correct answer: Payment Rule
Under the Payment Rule, some jurisdictions start the limitations clock from when the insurer paid the insured, not from the date of the underlying loss.
Question 5: An insured signs a lease clause releasing the landlord from liability before the loss. How does this typically affect the insurer's subrogation rights?
- The insurer loses subrogation rights against the landlord (Correct answer)
- The insurer can still pursue the landlord because pre-loss waivers are void
- The insurer gains rights against the insured for granting the waiver
- The insurer must seek approval from the state insurance department
Correct answer: The insurer loses subrogation rights against the landlord
Pre-loss contractual waivers of subrogation signed by the insured generally extinguish the insurer's right to subrogate against that party.
Question 6: In a products liability subrogation case, which theory allows recovery without proving the manufacturer was negligent?
- Strict Liability (Correct answer)
- Res Ipsa Loquitur
- Negligence Per Se
- Comparative Fault
Correct answer: Strict Liability
Strict liability holds a product manufacturer liable for defective products that cause harm regardless of whether they exercised reasonable care.
Question 7: What is the primary purpose of a reservation of subrogation rights letter sent to the insured during claims handling?
- To formally preserve the insurer's right to recover after payment (Correct answer)
- To deny coverage for the claimed loss
- To notify the tortfeasor of the pending subrogation claim
- To extend the statute of limitations
Correct answer: To formally preserve the insurer's right to recover after payment
A reservation of subrogation rights letter puts the insured on notice that the insurer intends to pursue recovery and asks for cooperation.
CCP Subrogation Recovery Process 2
Which doctrine bars subrogation recovery when the insured has not been made whole by the insurance payment?