Claims Handling, Loss Adjustment and Subrogation
Claims Handling, Loss Adjustment and Subrogation
This domain tests the claim lifecycle: notification, evidence, coverage analysis, quantification and recovery from third parties.
Handling and evidence
The assured must give prompt notice, preserve the goods, and act with reasonable despatch; clause 13 duties to minimise loss (sue and labour) are recoverable as particular charges. Typical documents: policy or certificate, bill of lading, invoice, packing list, survey report with photographs, temperature or weight records, correspondence with the carrier with reservation of rights, and, where relevant, the general average adjustment.
Quantification
Total loss is actual or constructive (MIA s.60); notice of abandonment under s.62 must be given with reasonable diligence and, once accepted, is irrevocable - it is unnecessary where no benefit could result. Partial loss of damaged goods under a valued policy follows MIA s.71: claim = insured value × (sound value − damaged value) ÷ sound value.
General average and recovery
General average contribution is payable where a sacrifice or extraordinary expenditure saved the adventure under the York-Antwerp Rules; particular average is borne by the individual cargo interest. On payment the insurer is subrogated to the assured's rights (MIA s.79) and can pursue the carrier in the assured's name, subject to Hague-Visby package limits and the one-year time bar. Deliberately exaggerated claims attract the Insurance Act 2015 s.12–13 remedies: the whole claim may be refused and the policy avoided.
Worked example
A valued policy insures goods for £110,000. At destination the sound value is £125,000 and the damaged value £75,000. Depreciation is (125,000 − 75,000) ÷ 125,000 = 40%. Claim = 40% × £110,000 = £44,000, less the £1,000 deductible = £43,000. Note the percentage is applied to the insured value, not to the invoice value, and the sound value is taken at destination, not at origin.
Marks-losing traps
- Applying depreciation to the invoice value or to the sum insured measured at origin.
- Treating "particular average" as a deductible or franchise.
- Paying a constructive total loss without considering abandonment formalities.
- Letting the carrier's one-year limitation expire while the subrogated claim is being assessed.