If an insured claim is settled for £2,500 with an excess of £300, and the insurer recovers £1,500 through subrogation, how much would be returned to the insured?

In this scenario, the insured has settled a claim for £2,500 but is subject to an excess of £300. The excess is the amount that the insured must pay out of pocket before the insurance coverage kicks in. Consequently, the insurer will only cover the remaining amount after the excess has been deducted from the total claim settlement.

First, determine the amount the insurer would actually pay out on the claim. This can be done by subtracting the excess from the total claim settlement:

£2,500 (settlement) - £300 (excess) = £2,200.

Now, regarding the subrogation recovery of £1,500, this amount is what the insurer recovers from a third party responsible for the loss. However, the recovery does not impact the excess applied to the insured's claim.

The insurer's payment to the insured was already reduced by the excess, which means that when the insurer recovers funds through subrogation, that recovery goes to the insurer, not to the insured directly. Therefore, since the insurer does not pass any of that recovered amount back to the insured, and the insured has already borne the cost of the excess, the insured receives nothing from the subrogation recovery.