Subrogation


The principle of subrogation is an extension of the principle of indemnity. This principle applies only to contracts of indemnity. So it does not apply to life insurance and personal accident insurance contracts as they are not contracts of indemnity. According to this principle, when the insurer pays compensation to the insured for loss, the insurer will get all the rights of the insured in respect of the damaged property and against a third party who is responsible for the loss. Thus, if A suffers a loss of property due to B's negligence, A has a right to recover the loss from B. If the property so lost is insured, then the insurer will have to compensate A. However, the insurer will, get A's right of recovery of loss from B. If A is allowed to recover the loss from B also, he will be making a profit which is against the principle of indemnity

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