CONSUMER ADVICE

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Principles of Insurance: Subrogation

Is the right of an insurance company who has paid a claim to its client to persue another party who may have caused the incident resulting in the claim.

Notes:

  1. The Insurer must exercise the right of recovery in the name of the Insured (prevents the Insured from obtaining more than one indemnity)
  2. Subrogation rights only apply where there is a legal liability under the policy i.e. where policy cover existed.

Example:

A client makes a claim under his/her own comprehensive policy for damage done to his vehicle by another person. His/her insurance company pay the claim but persue the negligent third party for the cost of the claim they have paid.

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