CA Subrogation & Recovery Procedures Flashcards
6 cards from real CA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 CA Subrogation & Recovery Procedures flashcards as text
Which type of subrogation arises from a contractual agreement between the insured and insurer, as stated in the policy?
Answer: Contractual subrogation
Contractual subrogation is explicitly granted by policy language, giving the insurer the right to recover from responsible third parties after paying the insured's claim.
If the insured negligently destroys evidence needed for a subrogation claim (spoliation), what consequence may the California adjuster face?
Answer: Loss of the subrogation claim or reduced recovery due to inability to prove liability
Spoliation of evidence can undermine the insurer's ability to establish third-party liability, potentially forfeiting or reducing the subrogation recovery.
What is the term for the situation where an insurer pays a claim and then discovers the loss was caused by the insured's own deliberate act?
Answer: Avoidance for arson or fraud
If an insured deliberately causes a loss (e.g., arson or fraud), the policy is voidable and the insurer may pursue recovery through rescission and fraud remedies, not subrogation.
A California adjuster settles a homeowner water loss and suspects the plumber who performed work caused the pipe burst. What is the best immediate action?
Answer: Preserve the failed pipe and obtain the plumber's contract and work records before issuing payment
Preserving physical evidence and gathering contractor documentation before issuing payment protects the insurer's subrogation rights and builds the recovery case.
Under the California Department of Insurance Fair Claims regulations, failing to pursue a valid subrogation claim may constitute:
Answer: An unfair claims settlement practice
California's Fair Claims Settlement Practices Regulations require insurers to pursue valid subrogation claims diligently; neglecting to do so can constitute an unfair practice.
In California, when an insured has uninsured motorist (UM) coverage and recovers a UM payment, the insurer's subrogation right against the uninsured driver is:
Answer: Limited because the uninsured driver often lacks collectible assets, though the right technically exists
While the insurer technically retains subrogation rights after a UM payment, practical recovery is often difficult because uninsured drivers typically lack collectible assets.