Domestic Pre-delivery Policy Administration Guide - Salvage of Claims What is Salvage? Who is entitled to this salvage? How will we know what our share of salvage will be? Does it make any difference who received the salvage? From what sources can salvage be expected? Who must lodge claims against insolvent estate? What will happen if I do not prove a claim in an insolvent estate? Must I contribute to legal fees? In whose name will the legal action be taken? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . What is Salvage? Salvage, in terms of the policy, is any recovery received from whatever source after the cause of loss, in respect of the insured debt which formed the subject of the claim. Who is entitled to this salvage? Salvage is shared between us in the same proportion in which we shared the actual loss. If the indemnity paid to you was 75% of the amount of loss while you carried the uninsured 25%, then any salvage would be shared between us on an 75:25 basis. You will then receive 25% of the salvage. How will we know what our share of salvage will be? This will be stated in the proposed settlement document under the insured's acceptance section. Does it make any difference who received the salvage? No. Whichever one of us receives the salvage will account to the other for their proportionate share of it. From what sources can salvage be expected? There are many, depending upon the circumstances. The main ones are: Dividends from an insolvent estate or payment under a formal offer of compromise. Payments received from an insured buyer (where the claim was based upon protracted default) or any guarantor, following the institution of legal proceedings. The realisation of any security that you held in respect of the insured debt. Who must lodge claims against insolvent estate? You are obliged to lodge and prove your claim in the insolvent estate, provided that there is no danger of a contribution being levied against creditors. If you had not done this by the time you lodged a claim against us in terms of your policy, our indemnity will be paid to you on condition that you eventually lodge and prove your claim in the insolvent estate. What will happen if I do not prove a claim in an insolvent estate? The terms of your policy requires you to refund the indemnity which we paid to you. However, the reason why you had not lodged and proved a claim will be taken into account when we decide whether or not to ask you to repay the indemnity, or to pay us our share of the dividends which you would have received had you in fact proved a claim. Must I contribute to legal fees? Legal costs will be shared pro rata. In whose name will the legal action be taken? Although we will initiate the legal action, it will invariably be taken in your name. Our attorney will be instructed on the basis that he must look to us for payment of any unrecovered legal fees and so you will not be responsibility at any stage for any costs.
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