Costs of hiring a replacement vehicle

In the June 2007 issue of Insurance Law Monthly there was a discussion of the decision of Mr Justice Morison in Bee v Jenson (No 2) [2006] EWHC 3359. The amount at stake in this case was just over £610, but it did not stop the parties from raising complex arguments as to the operation of subrogation in favour of an insurer who has indemnified the assured for the cost of hiring a replacement vehicle. This was a sequel to earlier proceedings from which there had not been an appeal: Bee v Jenson (No 1) [2007] Lloyd’s Rep IR 451(see the January 2007 issue of Insurance Law Monthly). The sequel raised an important question on the law of subrogation: is an insurer entitled to recover from the third party the amount that he has paid to the assured even though the insurer has recovered a part of that loss from a separate source? Morison J held that the insurers were entitled to recover the full amount of their payment, a ruling now upheld on appeal by the Court of Appeal, Bee v Jenson (No 2) [2007] EWCA Civ 923.