Page 20 - Life Assurance

If the insured has borne part of the loss through
the application of deductibles, inadequate coverage,
or because of legal costs involved in collection
against the third-party claims, the insurer may claim
recovery only after these costs have been repaid.

The only exception to this rule is that the
insurer is entitled to legal expense insured in
pursuing the subrogation process against a
negligent third party.

For example, assume that Mr. Omar's house,
valued at L.E 80,000 and insured for L.E 60,000
(under insured) is totally destroyed through the
negligence of Mr. Ehab. Omar's insurer subrogates
against Ehab, and collects L.E 30,000 and has legal
expenses of L.E 12,000. The insurer receives L.E
12,000 for legal expenses and Omar receives L.E
18.000. On the other hand, if the insurer had
obtained L.E 50,000, It would have received L.E
12,000 for legal expenses and The balance
(which is L.E 18,000) would have received by the
insurer as subrogation benefits. Omar would
receive L.E 20,000 of this, which is the amount he is
underinsured (L.E 80,000 -L.E60.000 = L.E 20,000).

61 Life31/life/life 08