Subrogation and double insurance in general

Cl. 5-13 is the general rule that the insurer is subrogated to the rights of the assured against third parties. This rule is also applicable to the loss of hire insurance. The general rule is that the insurer is entitled to his proportion of such claims. The insurer's claim shall not take preference over the assured's claim against the third party. The assured may have suffered losses that are not covered by the insurer, such as deductibles, or he has not taken out insurance for the loss, it is uninsurable or he has lost his insurance cover for that particular loss. Regardless of the reason why the assured has suffered a loss on his own account, he is entitled to a proportion of the recovery from the third party.

Cl. 2-6, sub-clause 1, contains the general rule on double insurance. The general rules is that each insurer is jointly liable towards the assured. He may choose between them, and if one insurer does not pay wholly or in part, the assured may make a claim against the other insurer until he has received the full compensation to which he is entitled.

In some cases, insurance conditions expressly state that the insurance is subsidiary to any other insurance.

Pursuant to Cl. 2-6, sub-clause 2, the subsidiary insurer is only liable to the extent the primary insurer does not pay the claim.  If all insurances are subsidiary, the rule in Cl. 2-6, sub-clause 1, shall apply which means that all of them are transformed to primary insurances with joint and several liability towards the assured.

Cl. 2-7 provides that the insurers are internally liable in proportion to the amount for which each insurer was liable and may seek recourse against each other if they have paid more than their share to the assured.

Cl. 2-6 and 2-7 are also applicable to the loss of hire insurance, but Cl. 2-7 is set aside by Cl. 16-16 as will be explained under 9.3 below.