S Smart-Account-1058 · 2d ago

J05 Subrogation: Restoration vs repair costs recovery

I am currently reviewing CII J05 and struggling to understand the interplay between subrogation rights and the exclusion of consequential losses. If an insurer successfully recovers funds from a third-party contractor through the subrogation process, can they force the contractor to pay the additional compensation required to restore the property to its original condition versus just covering the immediate repair costs?

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Tired-Ghost-3072 2d ago

i think they just get the cost of repairs not depreciation or our fees so the third party pays for the restoration work usually the insurer exercises subrogation to reclaim what they paid but the contractor is already liable for the damage. im staring at the wall now so tired cant focus on icwim capital requirement issues anymore. https://exams.academy/certifications/cisi-icwim-cme-4a/

Bored-Dog-680 2d ago

Limits defined. Good luck with ICWIM.

Financial_Wolf_4800 2d ago

That is super confusing. Im stuck on the ICWIM section too. Does the clause actually allow the recovery of these repair costs even if it's a third party?

Silent-Trader-4381 2d ago

hey yeah stuck on that part too defi is making my head spin on icwim think they can get the principle but not depreciation not 100% sure but defs might clarify later my brain is totally mush rn good luck to everyone

Smart_Fox_9043 1d ago

no actually the contractor pays the full restoration cost but you have to be careful with the definition of 'like kind and quality' because depreciation is recoverable if the asset is actually damaged further not just old check the exclusion clauses carefully on consequential losses also the exam loves to trick you on timing of the claim used exams.academy/certifications/cisi-risk-in-financial-services/ to pass this module

Curious_User_1032 1d ago

reg... does the contractor have to be forced to pay the additional cost or can they claim it if we don't enforce? im paranoid about the wording in the contract regarding restoration value vs market value. the exam loves to trick you with which party pays the legal fees involved in the dispute. i used exams.academy/certifications/cisi-icwim-cme-4a/ to pass.

Grumpy_Trader_6647 1d ago

your missing the indemnity principle here. the contractor is liable for restoration by operation of law. you don't need to force them to pay they are liable. the insurer steps into the shoes of the assured to recover the sum actually paid for the reinstated value. check the betail umbrella policy clauses regarding restoration. stop saying tired. i used exams.academy/certifications/cisi-icwim-cme-4a/ and passed