Underwriting Property Preservation Security Insurance for Cross Border Claims
Property preservation security insurance requires onshore Chinese guarantees backed by enforceable offshore bank collateral to mitigate cross-border subrogation risks.
Article 60 Insurance Law
Meaning
Legal transfer of claims from a policyholder to an insurance provider occurs when a loss is caused by a third party. This article 60 insurance law defines the statutory right of an insurer to pursue the liable party for compensation after a claim has been paid. The right arises automatically once the insurer provides the indemnity.
It prevents the policyholder from receiving double compensation for the same loss.
Subrogation Right
The insurer steps into the legal position of the insured person to recover the payout amount. Under article 60 insurance law, the policyholder is obligated to provide necessary documents and information to assist the recovery process. Any waiver of rights against the third party by the insured after the loss but before payment can jeopardize the insurance coverage.
The insurer only acquires rights up to the amount they have actually paid.
Third Recovery
Actions against the responsible party must be conducted in the name of the insurer. This article 60 insurance law allows for the pursuit of negligent shippers or carriers. If the third party has already paid the policyholder, the insurer may reduce its own payment by that amount.
Recovery efforts often involve maritime or commercial courts depending on the nature of the underlying damage.
Payment Requirement
Actual settlement of the claim is the prerequisite for the transfer of rights. This article 60 insurance law does not permit an insurer to seek recovery before they have discharged their duty to the policyholder. A mere agreement to pay is insufficient to trigger the subrogation.
Once the bank transfer is complete, the insurer assumes the legal standing to sue.