Salvage & Subrogation
Since the law on the issue of who gets what after a claim is paid is so sparse, insurers should try to apply equity and pro rate the salvage recovery with its insureds unless they have a contrary agreement. An insurer would be within its rights to either keep all of the salvage when it pays its full policy limits or apportion the recovery with the insured based upon that part of the insured’s loss that was uninsured. An insurer would be wise to apply equity and pro rate the salvage recovery in a situation when it has paid policy limits and the insured incurs a loss greater than limits. Since insurance is a contract of the utmost good faith, being fair with the insured, and pro rating the salvage recovery would be the best course absent a change in the policy wording.
The author and publisher disclaim any liability, loss, or risk incurred as a consequence, directly or indirectly, of the use and application of any of the contents of this blog. The information provided is not a substitute for the advice of a competent insurance, legal, or other professional. The Information provided at this site should not be relied on as legal advice. Legal advice cannot be given without full consideration of all relevant information relating to an individual situation.