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Subrogation: allocation of third-party recoveries

Insurance Law Monthly

Subrogation: allocation of third-party recoveries

An insurer who has paid sums to a policyholder for the purposes of reducing an insured loss has subrogation rights in respect of any recovery from the third party responsible for the loss. In exceptional circumstances an insurer may make payment to the policyholder for reasons other than the provision of indemnity for an insured loss. In Technology Swiss Pty Ltd v AAI Ltd trading as Vero Insurance [2021] FCA 95, Allsop CJ considered how a settlement agreement which made no reference to the insured loss should be construed.

On 29 April 2014 Technology Swiss (TS) and Vero entered into a marine cargo policy for the period 24 April 2014 to 24 April 2015 at 16.00. The policy provided for a limit of indemnity for exports of AUS$500,000 cost, insurance and freight (CIF) plus 10 per cent for any one conveyance or location, with an excess of AUS$250 each and every loss. The policy contained the standard suing and labouring clause.

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