Principle of Subrogation (English) || First Policy Insurance Brokers || Hari Radhakrishnan скачать в хорошем качестве

Principle of Subrogation (English) || First Policy Insurance Brokers || Hari Radhakrishnan

Welcome to InsurTalk! Today I would like to talk about an important principle of insurance, the principle of subrogation. What’s subrogation? When does it become applicable and how does it work? Subrogation as a concept is based on the legal principle of equity. Equitable subrogation allows one party to replace another party when it comes to a legal right. For the principle of subrogation to apply, there has to be a subrogateable interest in the claim for the insurer to pursue. How does a claim become subrogateable? In certain claims, a third party is responsible for the loss or damage that has happened to the subject matter insured. Once such claims are settled, they become subrogateable. A letter of subrogation is collected by the insurer prior to settlement. For example, in a marine cargo claim, the loss or damage to cargo could have happened due to negligence of the carrier or the transporter. So after paying out the claim to the insured, the insurer is entitled to stand in the shoes of the insured and enforce the insured's rights against the carrier, who is responsible for the loss. The insurer can then recover a compensatory amount from the carrier, to the extent of the claim paid. The claim doesn’t become subrogateable if the insured himself was negligent and caused the loss. Subrogation cannot be exercised by the insurer against the insured, after paying the claim. That would render the insurance meaningless. So there has to be a third party, who is responsible for the loss or who is the tortfeasor. Can subrogation be waived? There can be some situations, where exercise of subrogation rights by the insurer, can be problematic to the insured. There can be subrogation conflicts. An example is, when the third party involved is a related party, such as a subsidiary of the insured. In such cases, insured would be in a difficult situation amounting to suing against his own sister company. Another example can be of contractual relationships. There can be operation and maintenance contractors or construction contractors engaged by the client, where the insured is expected to hold the third party harmless. Subrogation would then not be enforceable. In such cases, there has to be prior agreement with the insurer at the time of taking insurance to waive subrogation. Else claims can get stuck, if the insurer is unwilling to forego his recovery rights, at the time of loss. Careful consideration must be given to possible subrogation conflicts, while buying insurance and obtain suitable waivers, where necessary. Thank you.