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Subrogation on employers' liability cover

Discussion in 'SP7' started by Dolemite, Mar 24, 2021.

  1. Dolemite

    Dolemite Member

    Hi, I'm hoping someone will help clear this up in my mind.
    I am going through the solution for Q3 on the 2018-04 SP7 paper:

    (ii) State with a reason whether subrogation is likely to be material for each class, giving an example if appropriate:
    (c) Employers’ Liability
    The solution says subrogation is unlikely to be material.

    My attempt said that:
    - Subrogation will be substantial under this liability class.
    - The insurer will be responsible for defending the employer from any legal action taken against it.
    - For example, employees may sue an employer for exposure to asbestos in the workplace and resulting health complications.
    - The insurer will take on these liabilities and will be responsible for the defence.
    - There are unlikely to be any recoveries under this class as there is no property to sell, just the transfer of liabilities.

    I am struggling to understand why subrogation wouldn't apply to this class. The definition of subrogation is that "it is the substitution of one party for another as a creditor, with a transfer of rights and responsibilities".
    Under an EL claim, is the insurer not liable for compensating the claimant (hence there is a transfer of rights and responsibilities)?

    Thanks,
    Dolemite.
     
    Dolemite, Mar 24, 2021
    #1
  2. Ian Senator

    Ian Senator ActEd Tutor Staff Member

    I'm no legal expert, but this is my understanding. You need a culpable third party for subrogation. For example:

    Motor: let's say you have a crash. You have motor insurance, so you claim on that. Your insurer pays you for the damage to be repaired, but now 'steps into your shoes' (that's the subrogation bit), and so takes over - they then find that the other driver was at fault, so they look to recover their loss from the other driver (or more likely their insurer).

    Employers' liability: let's say you're the employee, and you've slipped over on some oil at work which was due to your employer's negligence. You claim against them for your recuperation. But your employer has EL cover (by law in the UK), so gets the cost back from their insurer. Now the insurer steps into the employer's shoes (that's the subrogation bit again) - and then...oh hold on, there's nobody else to get the money back from. So it's not going to work.
     
    Ian Senator, Mar 25, 2021
    #2
  3. Dolemite

    Dolemite Member

    Thanks Ian, that makes perfect sense now!
     
    Dolemite, Mar 26, 2021
    #3

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