The Doctrine of Subrogation

Subrogation means the right of the insurer who had paid a loss to be put in the place of the insured and thus be entitled to every right of the insured whereby the insured would have been able to extinguish or diminish the loss for which the insurer has indemnified the insured.

The general rule of law is that the rights conferred by operation of the doctrine of subrogation include the benefit of all rights and remedies of the insured against third parties to seek compensation for loss incurred.

Thus the insurer would be subrogated to any claim of any character which the insured would be entitled to bring against the third party. therefore the insurer is legally entitled to claim from the insured any benefit received from the third party where the third party intended to compensate the insured for the loss for which the insurer have indemnified him.

It is trite law that the insurer would be entitled to exercise the rights of subrogation if the following elements have been established :

1. That the subject matter of insurance must relate to indemnity insurance

2. That the rights to which subrogation relates has some connection with the subject matter insured.

3. That the rights in regard to make subrogation apply are capable of being legally enforced by the insured.

4. That the insurer has made payment to the particular policy.

5. That the insurer’s right of subrogation has not been excluded by a contract with another insurer or by a term of the particular party’s contract.

In Stearns v Villagemen Reef Gold Mine and Co. the court expounded that in a situation where the insured has been indemnified by the insurer and receives a voluntary payment from third party by way of a gift, and if such gift results in diminishing or extinguishing the loss sustained, then the insurer would be legally entitled to claim the benefit of the gift. In Yorkshire Insurance v Nisbert it was stated that the general principle is that the insurer can never recover more than...