NATIONAL LAW UNIVERSITY ODISHA
INSURANCE LAW PROJECT
SEMESTER VII
4th YEAR
TOPIC- DOCTRINE OF CONTRIBUTION AND SUBROGATION
UNDER THE GUIDANCE OF:
MR. RAJAT SOLANKI ASSISTANT
PROFESSOR OF LAW
MRS. DIVYA SINGH RATHORE
ASSISTANT PROFESSOR OF LAW
SUBMITTED BY:
Jatin Yadav
(2017/[Link]/046)
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TABLE OF CONTENTS
TABLE OF CASES....................................................................................................................................2
Introduction...........................................................................................................................................3
Research Methodology..........................................................................................................................4
Objective...........................................................................................................................................4
Hypothesis.........................................................................................................................................4
Research Questions...........................................................................................................................4
Scope and Limitations........................................................................................................................4
Doctrine of Contribution.......................................................................................................................5
When does if arises?..........................................................................................................................5
The right to contribution...................................................................................................................6
Conditions for the Right of contribution............................................................................................6
Stance of common law and equity on Contribution..........................................................................8
How to distinguish contribution from subrogation...........................................................................9
Insurer's liability to make contribution in equity to another insurer...............................................10
Principle of Reinstatement..................................................................................................................12
History.............................................................................................................................................12
It's A Choice Not A Right..................................................................................................................12
Difficulties in its Implementation.....................................................................................................13
CONCLUSION.......................................................................................................................................14
BIBLIOGRAPHY.....................................................................................................................................15
Article..............................................................................................................................................15
Books...............................................................................................................................................15
Websites..........................................................................................................................................15
Journals...........................................................................................................................................15
TABLE OF CASES
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1. Godin vs London Assurance Company, England Reports 1758
2. North British and Mercantile Insurance Co vs London, Liverpool, and Globe
Insurance Co, 1877
3. Tip Top vs State Insurance
4. Andrews vs Patriotic Assurance of Ireland, 1886
5. American Surety Co vs Irrighton, 1910
6. Zurich Insurance Company vs Shield Insurance Company Limited, 1988
7. Elf Enterprise (Caledonia) Ltd vs London Bridge Engineering Ltd and Others, 1997
8. Eagle Star Insurance Co Ltd v Provincial Insurance Plc, 1994
9. Anderson v Commercial Assurance Co, 1855
10. Leppard v Excess Ins Co, 1979
11. West-minister Fire v Glasgow Provident, 1883
Introduction
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For a need to there be double insurance, each and every insurer to a policy will contribute
proportionally to the amount they are liable under the contract. If an insurer had to pay more
than his share to the loss, then he is entitled for an action against his co-insurers to claim
contribution from them. This is very similar to a surety when if he has paid more than his
share of the debt, then he is entitled to claim from others. As Lord Mansfield said “If the
assured is to receive one satisfaction, natural justice says that the several insurers shall all of
them contribute pro rata, to satisfy that loss against which they have all insured.” 1 The right
of contribution between insurers is triggered by the fact that each contract is a contract of
indemnity and covers the identical loss that the identical assured has sustained. The right to
sue his insurers in any order is a valuable right for the assured, for it protects him against loss
in the event of one or more of his insurers becoming insolvent; but as it would have been a
considerable hardship on the insurers that one alone of several co-insurers should bear the
whole loss. Lord Mansfield was one of the major contributors in the development of this
doctrine and where it is today. He held that that in a marine insurance if an insurer has paid
more than what his share to the loss to the insured than that insurer has a right to recover the
amount which he has paid in excess to his rateable proportion from his co-insurers. This same
principle of contribution later was held to apply not only in marine insurance but also in fire
insurance and also in liability insurance.
Reinstatement literally means replacement of a thing that has been lost or repairing the
damaged property to bring it to the state closer to how it was originally, both in value and in
utility. Reinstatement as a method of indemnity applied generally to property law especially
in the case of fire insurance. In Reinstatement an insurer undertakes the task of restoring a
damaged building or substantially damaged machinery to the condition it was at before the
damage. In some cases, the insurance policy has a clause for the insurer to instead of
restoring the building or the machinery, can directly pay the insured. As a method of
indemnity Reinstatement is very seldomly used because of its inherent difficulties. e.g., if the
property fails to meet the original requirements in any material manner or in quality after
repair, then the insurer will be responsible for paying damages. Secondly, the expense
involved in restoration can be much higher than the total sum Insured , as they have to do the
restoration irrespective of the cost once the insurer has agreed to reinstate.
1
Godin v London Assurance Co [1758] EngR 138
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Research Methodology
Objective
I. To analyze the factors needed for doctrine of contribution to arise.
II. To examine the conditions required for a doctrine of contribution to take effect.
III. To examine the stance of common law and equity on contribution.
IV. To compare the Doctrine of contribution to that of doctrine of subrogation.
V. To analyze the co-insurer’s liability to the other insurer in contribution.
VI. To examine the history of Reinstatement clause in insurance law.
VII. To examine the difficulties with the application of Reinstatement.
Hypothesis
That the UK jurisdictions have one of the most developed insurance law and insurance
industry while India has seen a significant amount of growth and development in recent
years.
Research Questions
I. What are the factors that need to be present for a doctrine of contribution to arise?
II. What is the stance of common law and of equity on contribution?
III. How is doctrine contribution different from doctrine of subrogation?
IV. What is the liability of Insurer to make contribution in equity to his co-Insurer?
V. What are the difficulties faced with the application of Reinstatement?
Scope and Limitations
The research analyses the history and evolution of contribution and reinstatement in
insurance law in the UK, and most of the research is limited to only that jurisdiction. The
research relies on case laws mostly as were available through the internet. This research work
has been directed in such a manner that it provides a thorough understanding of the two
doctrines and the various facets of them.
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Doctrine of Contribution
When does if arises?
For the doctrine of contribution to arise, all of the elements that are a party of double
insurance have to be present. Some factors need to be present for double insurance. These
factors are as follows: the policies must (1)have the same subject matter that is present,
(2)have the same party as the assured, (3)the risk shall be the same, eg; insurance against the
risk of property damage from fire, (4) the period of cover shall be the same and (5) the scope
shall be the same. Apart from this, the loss that has arisen must be responding to the
requirements that are in the policies which are in existence at the time. Is has to be notes that
insurer does not pay out of charity or some other pro-bono method but rather because of their
existing a legal relationship between the insurer and insurer to on the happening of an event
in which loss has occurred to pay the insured. In practice when dealing with non-marine
insurance policies, the assureds’ rights are more often than not circumscribed by the terms of
the polices which will have provisions against double insurance excluding, or limiting the
insurers liability if other insurers are involved in the same risk. This means that the insured
will have nothing but a little bit of a choice to go to each and every one of the insurers to
recover his loss.2 For e.g.,
(1)Simran has a property worth 7 lakh, She took insurance from Reliance worth 4 Lakh
rupees and from Zerodha of 2 lakh. In case of accident, she incurred a loss of 4 Lakh to
the property. Simran can claim this rupee 4 Lakh from Reliance but after that she is
barred from making a claim from Zerodha. Now the amount over the rateable
proportion to the loss, can be claimed by Reliance from Zerodha.
(2)A has taken 1000-rupee insurance from SBI and another 1000 rupee insurance from
ICICI, then if the subject matter is lost than the insured can claim from one, the other or
both. Let’s say if he claims from SBI. Then the SBI will give him 1000 rupee and then
SBI can claim 500 from ICICI as contribution.
2
John Dunt and Wayne Jones,’ Insurable Disputes (3rd Edition) - Double Insurance
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The right to contribution
Doctrine of Contribution occurs where the same assured insures the same interest with more
than one insurer. The aim of contribution is, similar to subrogation, to prevent the assured to
get more than what he is liable to get from the whole loss. Therefore, if the assured recovers
the whole loss from one insurer which he could have recovered from the other, the insurers
are permitted to contribute rateably.3 The chancery courts were the first to recognize this rule
and it is of ancient origin.“This doctrine was explained and defined in the case of North
British and Mercantile v Liverpool and London Globe (also known as King and Queen
Granaries) case as: Contribution exists where the thing is done by the same person against the
same loss, and to prevent a man first of all recovering more than the whole loss or if he
recovers the whole loss from one which he could have recovered from the other, then to make
the parties contribute rateably. But that only applies where there is the person insuring the
same interests with more than one office. The principle of contribution is a by-product of that
of indemnity. So, in all the contracts if indemnity this doctrine can be applied, and because a
life insurance not being a part of a contract of indemnity, doctrine of contribution does not
apply to it.”
The right to contribution flows from the discharge by one debtor of a liability owed by itself
and one or more co-debtors. A debtor that has charged itself with the entirety of a debt
remains bound as against the creditor to the full extent of that undertaking. However, where
more than one debtor has so charged itself, as between such debtors it is inequitable that the
final incidence of liability should depend on how the creditor chooses to seek payment. The
solution is to grant any debtor that is called upon by the creditor to pay, and does pay, a
disproportionate share of the debt a right to contribution from all co-debtors so that the final
incidence of liability is incurred by each debtor on a proportionate basis.
Conditions for the Right of contribution
To give rise to a right of contribution the following conditions must be satisfied:
(i) All the insurance must relate to the same subject-matter.4
“In the case of North British and Mercantile Insurance Co v London, Liverpool and Global
Insurance co.,5 Messel J dealt with the condition of double insurance. There were two policies
in effect and problems arose due to the drafting of the clauses in the policies which stated that
they would not be liable to contribute more than their rateable proportions where other
insurance was present. There was a fire which broke out destroying some grain which was
stored with Barnett & Co which belonged to Rodocanachi & Co., who had similar policies
covering grains stored at different locations. When reading the condition, Messel J stated that
as the wharfinger’s conditions were not just insuring the assured’s property but the property
3
North British and Mercantile Insurance Co v London, Liverpool, and Globe Insurance Co [1877] 5 Ch D 569
4
ibid.
5
(1877) 5 ChD 569, CA per Jessel MR at 577
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which they were holding on trust or on commission, for which they were responsible, this
was an important consideration when construing the conditions.”The word “property” which
was used in the conditions does not mean the actual chattel but the interest of the assured
person. According to him, the words “covering the same property” in Condition 9 could not
mean the actual chattel, as an absurd result would occur. He concluded that such words were
included where the same property, that is the subject-matter of the insurance, and the interests
are the same.
“In Tip Top v State Insurance, 6 there were two policies, the first covered property of the
assured or any property where the assured was in some way responsible for and the other
policy was in the form of a loan receipt which was issued by the bailor’s own insurer and
which covered the same property. The court held that the same subject matter was covered.
This can be a problem as well as whether there is double insurance or not, in terms of
insurable interest in the same subject matter is not clear in all cases.”
(ii) The policies concerned must all cover the same interest of the same insured 7 and the
policies concerned must all cover the same peril which caused the loss.8
“Another factor which must be satisfied is that both policies must cover the same risks. The
courts in Zurich Insurance Company v Shield Insurance Company Limited 9 had to deal with
the issue of whether the same risk was covered by both policies. The two policies were a
motor insurance policy and an employers’ liability policy. Under the motor insurance policy
the plaintiff had to indemnify Q for any negligent driving of Q’s motor car and had to
indemnify the driver if a person who was driving the motor car was doing so with Q’s
authority. The defendant on the other hand under an employers’ liability policy was liable to
indemnify Q against liability to pay compensation for injury, accident or disease sustained by
any employee of Q, arising out of and in the course of his employment with Q. S, an
employee was seriously injured when his motor car, which was owned by Q and, in which he
was a passenger, collided with a bus. D was driving. D and S were both travelling in the
course of their employment. S recovered a substantial sum and Q could claim indemnity from
D for the full award. The court held that while the liability to afford indemnity under each of
the policies could arise on the happening of the same event, neither the interest of the insured
under those policies nor the risks assumed by the plaintiff and defendant respectively were
the same. The liability covered by the motor policy was Q’s vicarious liability as the owner
of the motor car, for the breach by the driver of a duty owed to the public in general and not
for any breach of a duty which was owed by Q to S as his employer. The employers’ liability
policy covered the liability of Q for breach of its duty to take care in relation to S’s safety in
the performance of his duties due to his employment. As a result, the right to contribution did
not arise was held in this case.”
6
(2002) 7 NZBLC 103,564
7
Andrews v Patriotic Assurance of Ireland [1886] LR lr 355.
8
American Surety Co v Irrighton [1910] 37 TLR 91
9
[1988] I.R.174
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“The House of Lords when reversing the decision of Lord Caplan in Elf Enterprise
(Caledonia) Ltd v London Bridge Engineering Ltd and Others 10 held that the insurers were
entitled to exercise rights of subrogation, as the law was settled that where an insurer had
paid in full to an assured for loss that was covered by a contract of insurance between them,
he could enforce in his own name, any right which was present to the insured. Lord Bingham
in the House of Lords stated that the issue was whether, as the operator contended, a
subrogated claim properly made in its name by its insurer, who has indemnified it under a
policy of insurance, to enforce a contractual right of the operator against the contractor or was
it, as the contractor contended, a claim for contribution by one part liable to indemnify the
operator against another? He preferred the view of the operator.”
(iii) The policies must have been in force and all of them should be enforceable at the time of
loss.11
“When insurance policies are taken out by the assured, each of those policies must be legal at
the time when the loss has happened 12 and should not have lapsed.13 This is another crucial
requirement for double insurance to be present. In, Sickness & Accident Assurance
Association Limited v The General Accident Assurance Corporation14 , the court had to deal
with the policy which was effective when the premium had not been paid. Here the claim had
been paid for by the insurance company to the tramway company for the loss that had been
suffered. The insurance company then decided to bring an action under the right of
contribution against another insurance company for the money that had been paid out. This
was done on the basis that the risk covered was identical. Lord Low held that the pursuers
had the right to sue. It is interesting to look at the facts of the case. The agreement that was
entered into clearly stated that the policy covered a tramway against accidents which were
caused by their vehicles to third parties for a period of 12 months from 24th November 1888
inclusive. This was however subject to the condition that there could be no insurance effected
until the premium had been paid. There was an accident however, which happened on 24
November, before the premium had been paid under the terms of the contract. The court held
that as there was no attachment to the second policy, as the requirement that the premium had
to be paid had not been complied with, then there was no double insurance.”
Stance of common law and equity on Contribution
This doctrine has been recognized both in common law and in the equity. Although not all
the aspects of this doctrine are same in both, as the common law rules that governs
contribution is differing in certain position from that of equity. Since. the fusion of the
administration of law and equity it is clear that the equitable rules prevail so that it is possible
10
[1997] Times, 28 November
11
Woods v Co-operative Insurance [1924] SC 692
12
Eagle Star Insurance Co Ltd v Provincial Insurance Plc [1994] 1 AC 130
13
Ocean Accident and Guarantee Corporation v Williams [1915] 34 NZLR 924
14
[1892] 19 R 977
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to state, without prejudice to the technical availability of the separate common law right to
contribution, that this doctrine applies both at common law as well as in equity.15
The whole point of the doctrine of contribution, acknowledged both at common law and in
equity and recognized and extended by laws, is that the final liability should not be on a
single insurer who has to bear the weight of his co-insurers too but rather it should be shared
according to their rateable proportion, among them. It should translate to if an insured duly
complied with all the requirement of the contract, and then he brought in claims for recovery,
then distribution among the insurer shall be done as to not only put all the strain on a single
insurer.
In general, when there are two or more than two insurers, who are contractually liable for the
loss that has been suffered by the insured, then doctrine of contribution can be applied in this
instance. Then the question came, who will bring in this contribution, the insurer or the
insured. This was the question raised in the case of Bovis Construction Ltd v Commercial
Union Insurance Co Ltd16 as to whether contribution was permitted on (1) the basis of the
contractual relationship between the parties or (2) whether it should be permitted due to the
equitable principle or (3) was it permitted under some statutory provisions. Steel J concluded
that it was based on equitable principles and the Civil Liability (Contribution) Act 1978 did
not apply. This was done as to stop the insured from getting more than what he should get
fairly, and what he is actually entitled to get in a contract of indemnity. Because of that it
cannot be contended that as the insured had agreed to the terms and condition of the
insurance policy, the he should have to be satisfied with the final results he got due to the
wording of the policy. Thus, it could be said that doctrine of contribution also includes the
issue of fairness on the basis of equitable principles.
How to distinguish contribution from subrogation
By the end of eighteenth century, this doctrine of contribution had been a pretty commonly
used as a principle of indemnity in both common law as well as equity courts. It had
developed so that if a person had paid the third party to discharge another’s obligation to
himself, then he had acquired from the third party a right to sue the other party, who had the
primary obligation to pay, for contribution or for an indemnity. When the claim that has been
made is among the joint sureties, and it is limited to a portion of the payment then this claim
would be for contribution. However, when the full amount is claimed, then it would come
under the doctrine of subrogation under the insurance contract.
The substantive difference subrogation and contribution is that in contribution it is upto the
court to determine the proportional liability of the multiple insurers to the insured’s loss while
a subrogation action depends entirely on the liability of the insurers to the insured. hat a claim
15
Burke v LFOT Pty Ltd [2002] HCA 17
16
[2001] Lloyd’s Rep. 416
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for contribution against a co-insurer of the same insured for the same peril is substantively
different than a claim brought by an insurer in the insured’s name by way of subrogation. In a
subrogated claim, the subrogated party (insurer), is entitled to all of the amount recoverable
by the nominal plaintiff (insured) as against the third party up to the amount of its indemnity.
In contrast, in a contribution action, the proportionate liability of each insurer is determined
and the paying insurer will recover from the other insurers only such amount as exceeds its
proportionate share.
The principle where an insured is covered by more than one policy for the same risk, the law
treats the various policies as one insurance, thereby precluding the insured who has recovered
from one insurer to recover again from the other insurer. The law will not allow the insured to
recover more than the full amount of its loss, regardless of the fact that the insured may have
more than one policy that could indemnify it for the same loss.17 This is different from the
situation where the insured has a primary right against a third party. Therefore, in cases
where the insured is covered for the same risk by more than one policy, the insurer’s only
way to enforce its right to contribution from other insurers is by means of an action in its own
name for equitable contribution. What does this mean for multiple insurers of the same peril?
Understanding the difference between the right to claim equitable contribution versus
equitable subrogation will avoid unnecessary legal expenses and unfavorable outcomes. As a
rule of thumb, if the risks are the same, equitable contribution is available. If the risks are
different, equitable subrogation is available. This is, of course, subject to any legislation in
the relevant jurisdiction that may alter the common law on this point.
Insurer's liability to make contribution in equity to another insurer
“In most of the cases, for liability to arise there has be damage that has been suffered by a
claimant due to some torts done by a tortfeasor. In some circumstances, there can even be
joint liability between the tortfeasors, which impacts how liability is distributed. These
situations include where the tortfeasors could be jointly liable, or cause the same damage or
cause different damage to the claimant. The definition of a tortfeasor can be found out by
seeing whether the cause of action is same, they are both responsible for the same, and if the
evidence that is same can be used to bring action against them. If this is present then it could
be considered that they are joint-tortfeasors.18 This arrangement is also common from a
double insurance perspective where you have numerous insurers and who are responsible
under the policy for the loss that has been suffered by the assured. Where there are numerous
tortfeasors and where there is a distinct cause of action against each tortfeasor, then each
tortfeasor will only be liable for the part of damage which he is responsible for. 19 It has
always been the case and the correct approach, that the remedies that are provided for under
contribution or reimbursement are restitutionary in nature and the main purpose behind this is
17
Caledonia North Sea Ltd. v. London Bridge Engineering Ltd [2000] S.L.T. 1123
18
Sweet and Maxwell, ‘Clerk and Lindsell on Torts’ (20 th Ed), 273
19
Performance Cars Ltd v Abraham [1962] 1 Q.B 28
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to prevent the likelihood of unjust enrichment of a defendant who has been conferred a
benefit by the Plaintiff’s payment.20”
“The doctrine of contribution is not confined to double insurance but also to co-sureties. The
principles of contribution when dealing with a co-surety situation is similar and the burden
still apply equally even though they are not aware of the existence of each other’s existence.
However, they must be liable in respect of the same debt. The amount which is recoverable
depends on the number of sureties. The common burden applies due to the common
obligation of the co-sureties.21”
20
Grupos Torras SA v Al-Sabah [1999] CLC 1469
21
Mahoney v McManus [1981] 36 ALR 545
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Principle of Reinstatement
History
The principle of reinstatement or as it is known in the present day, “reinstatement
referendum”, was introduced in England first. It began after the First world war and was
brought in because of the rapid increase in prices due to which the normal provision was
found to be insufficient or almost insignificant and the insurance was not achieving the object
with which it was made. So, the insurers permitted the insured to insure their building and
plant (excluding stock) on the basis of its value as new and agreed to settle the loss on that
basis. The original wording of the reinstatement was changed just before the second world
war and the substance of the clause now used under title “Reinstatement Memorandum” is
that the claim should be settled in case of destruction where the property insured is
“buildings” by “rebuilding” and in the case of other property insured replacement and in case
of damage, whatever may be the property, to repair and restore the damaged portion and in
either case “equal to but not better or more extensive than its condition when new”. The
words in the quotation are very important and significant, especially in case the property
insured is plant or machinery in the wake of technological advancement and new inventions
rendering the old machinery partly or wholly obsolete. The import of the words in quotation
is that, when a new type of machinery or plant is substituted by “reinstatement” and there are
definite advantages to the insured, say by increased output or saving of labour, he is obligated
to contribute a reasonable proportion of the cost of “reinstatement”, the amount or
contribution, of course, depending entirely on the facts and circumstances of each particular
case.
It's A Choice Not A Right
Reinstatement means replacement of what is lost or repairing the damaged property and
bringing it to its original value and utility. In Anderson v Commercial Assurance Co, Lord
Esher explained: “We have come to the conclusion that the words reinstate and replace
should thus be applied: if the property is wholly destroyed, the company may, if they choose,
instead of paying the money replace the things by others which are equivalent; or, if the
goods insured are damaged but not destroyed, may exercise the option to reinstate them, i.e.,
to repair them and put them in a condition in which they were before the fire.”22
“If the Insurance Company at its option, reinstate or replace the property damaged or
destroyed, or any part thereof, instead of paying the amount of the loss or damage, or join
with any other Insurance Company or Insurer(s) in so doing, the Insurance Company shall
not be bound to reinstate exactly or completely but only as circumstances permit and in
reasonably sufficient manner, and in no case shall the Insurance Company be bound to
22
(1855) 55 DJQB 146(CA).
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expend more in reinstatement than it would have cost to reinstate such property as it was at
the time of the occurrence of such loss or damage nor more than the sum insured by the
Insurance Company thereon. If the Insurance Company so elect to reinstate or replace any
property the insured shall at his own expense furnish the Insurance Company with such plans,
specifications, measurements, quantities and such other particulars as the Company may
require, and no acts done, or caused to be done, by the Company with a view to reinstatement
or replacement shall be deemed an election by the Company to reinstate or replace. If in any
case the Company shall be unable to reinstate or repair the property hereby insured, because
of any municipal or other regulations in force affecting the alignment of streets or the
construction of buildings or otherwise, the Company shall, in every such case, only be liable
to pay such sum as would be requisite to reinstate or repair such property if the same could
lawfully be reinstated to its former condition.”
One of the major differences between a Reinstatement clause in a policy and the general
indemnity clause is that in a Reinstatement cover the insurers will pay the cost of replacement
with a new one which is equal to but not better than the item lost or damaged, but in an
indemnity cover that the insurance will only pay for the second hand value of the item i.e.
what you might get if you sold it. This is its market value, not the written down value, nor
what it would cost to replace, and so may be inadequate, particularly if the item is hired and
the owner wants a replacement.
If the policy provide that the insured will be paid by the insurer“the value of the property at
the time of the happening of its destruction or the amount of such damage thereto or at its
option reinstate or replace such property or any part thereof”, then it is on the discretion of
the insurer whether to reinstate the property concerned or instead to give the payment in cash
to indemnify the insured. The reinstatement clause is not on the discretion of the insured and
the insured cannot insist the insurer for reinstatement if the insurer has decided to pay 23, nor
can the insured demand the insurer to spend the amount they have given to him to reinstate
the premises or his property that has sustained damage.24
Difficulties in its Implementation
The reason as to why Reinstatement is rarely used as a method of Indemnity is because of the
difficulties that are inherent to it. For example, if the property that has been restored after
sustaining damages is not upto the expectations or performance level of the insured as per the
specifications he had provided relating to the original, he can make insurer liable to pay
damages to him. Another problem that this method faces is that the total expenditures that
that the insurer has to pay can sometimes get much more than the actual sum that has been
insured, as once the insurer has agreed to do restoration, they cannot back out of it and have
to do it no matter what and how high the costs become.
23
Leppard v Excess Ins Co [1979] 2 All ER 668
24
West-minister Fire v Glasgow Provident [1883] 13 App cas 699 (HL). Re, Liverpool Mortgage Ins Co, [1914] 2
Ch 617.
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CONCLUSION
This project took into account the evolution of doctrine of contribution and the application of
it in insurance law in the jurisdiction of the United Kingdom, has tried to analyze how these
two doctrines have been implemented in the insurance law of that jurisdictions. The author
took into the UK jurisdictions mainly, because English law is perhaps one of the oldest laws
in the entire world and many jurisdictions, including India, have their law largely based on
the Insurance law of the English law, as Indian Insurance Act of 1938 was majorly based on
the Marine Insurance Act of 1906. Above discussion cinch that the concepts of indemnity and
contribution are vital for the purpose of insurance law. In short, it is obvious that the purpose
of the indemnity principle is to fetter insured from benefitting and tries to enforce the
principle of prevention of unjust enrichment. It is the salient feature of the indemnity to
restore the insured in the position he was before the accident or harm as if no such loss
occurred. With very few exceptions, like life insurance, all contract of insurance is indemnity.
And stepping forward, contribution is actually nothing more than a further step in the
implementation of the principle of indemnity.“Because this equity cinch that the insurer will
be in the position of the insured to sue the third party who cause damages and that too only
when the only one of the insurers gave insurance money rather than both of the insurer/s.
This is clearly based on the principle of equity. Some suggestion I would recommend is that
when the contribution clause of an insurer’s policy include provisions such as excess, ratable
proportion and escape clauses in the policies, all of these should be held void. Again, it
should only be the reference to such clauses which will be void, and not the whole term of the
contract.”If English law does not implement such legislative provisions, then the courts
should change the common law position. The cases at present in this area have not provided
much assistance. “The courts should in such circumstances rule that the combination of the
clauses is irrelevant and that in such situations, the clauses cancel out each other and each
insurer will be equally liable under the policies. The assured can chose to seek indemnity
from anyone of the insurers. The insurer who had paid out, can then seek contribution from
the other insurer, thorough common law principles of contributions. There is also a lack of
coherence from the courts and other jurisdictions which could provide some guidelines or
principles in this area. In any event, whichever method or principles the courts adopt, in a
consumer market, the ultimate beneficiary who should be protected are the assured.”
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BIBLIOGRAPHY
Article
Rob Merkin, ‘Tort, Insurance and Ideology: Further Thoughts’ (2012) 75 The Modern
Law Review 301
Books
John Dunt and Wayne Jones, Insurable Disputes (3rd Edition)
Kapoor N, Elements Of Mercantile Law (Sultan Chand & Sons 1983)
Law of Insurance by Avatar Singh, Eastern Book Company, 2nd Ed., 2010.
Insurance Law: Doctrines and Principles by John Lowry, Philip Rawlings and Robert Merkin,
3rd Edition, 2011.
Websites
Principle of Contribution in Insurance | [Link] <[Link]
of-contribution> accessed 16 November 2020
Principles Of Insurance - Meaning, Types & Benefits | [Link] <[Link]
exams/principles-of-insurance/#:~:text=Principle%20of%20Contribution,from%20different
%20policies%20or%20companies.> accessed 15 November 2020
The contribution doctrine versus "other insurance" clauses | [Link]
< [Link]
clauses/>
Journals
Dhruvi Dharia ‘Marshalling and Contribution’(2020) law times journal
Susie Wakefield and Matthew Brown, ‘Double insurance and contribution’ Lexis Nexis
Robert Merkin, ‘Contribution: insuring obligations’ - Insurance Law Monthly
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