Subrogation is also used in insurance law. Indeed, following a claim, the insurance must compensate you for the damage that you have suffered.
However, if the loss was caused by a person, the culprit, then it is in principle this person who must compensate you. However, as the insurance has already compensated you, the insurance is subrogated in your rights towards the culprit.
The Insurance Policies respond in the first place, but when there is a third party responsible, it is fair that ‘who breaks, pays’ and finally assumes the damages if their responsibility is proven. Hence subrogation in insurance is born.
In this context, we are going to explain what it consists of, and what are the actions available to the insured to exercise against a responsible third party in favor of the insurers.
What is the principle of subrogation in insurance?
According to the RAE, ‘subrogate’ is to replace or put someone or something in place of another person or thing. In terms of insurance, insurers make available to the insured, and if he wishes to exercise, the actions that legally assist him against responsible third parties to claim the amounts up to which they would have indemnified said insured. We must not forget that he is a figure that is included in the settlements.
Therefore, it is the insured who is obliged to protect the interests of their Insurers, to be able to recover the amounts for the damages that have occurred in an accident, informing the responsible third party from the outset so that they have the opportunity to involve to your Insurer promptly, interrupting the prescription of the action. So in this scenario, they will be :
- The claim against the policy itself.
- The claim against the third party, allegedly responsible.
Key Recommendations
- The sooner the recovery study is launched, the less information we will lose along the way.
- Recovery should be promoted to reduce claims.
- Insurers positively observe the proactivity in defending this common interest.
When initiating the judicial claim, a unit of the action against the responsible third party is recommended due to procedural economy and legal expenses, whose contribution should be previously agreed upon, taking into account whether the action will prosper or not and the concepts claimed (the franchise, part of the uninsured loss, etc
Why is the principle of subrogation in insurance?
The “ultimate net loss” clause, coming from the English market, and which presupposes that the final loss is calculated by discounting the amount recovered, does not apply to Spanish policies unless expressly included, but in this branch, we find placements for Insurance and Reinsurance / Coinsurance airlines, normally participating in the English market and with several layers. From here, other standard or limiting liability contracts that are usually invoked by the parties may come into play.
This can be further complicated when the insured also claims some non-insured points such as consequential damages (compensation to passengers, acceleration of the repair to reduce the time of the plane on the ground.
We must affirm that in these cases the role of the Insurance and Reinsurance broker to provide solutions and advice in this matter is more than evident to avoid problems in the future.
