Doctrine of Subrogation (Insurance) Flashcards
What is the doctrine of subrogation in insurance?
The doctrine of subrogation or legal substitution is exemplified in the following situation. When it comes to claims of payment for the damage or loss done to the insured, the insurer is subrogated with the rights to claim payment for the said damages or loss to the wrong-doer or third (3rd) party. This process is called legal substitution defined under Article 2207 of the New Civil Code as, the substitution of one person in place of another with reference to a lawful claim or right, so that he who is substituted succeeds to the rights of the other in relation to a debt or claim including its remedies and securities.
To illustrate, the process of substitution starts upon happening of the event insured against, the insurer will initially pay for the amount covered by the insurance policy which is in the amount equivalent to the loss and/or damage done to the insured. Subsequently, the Insurer, while stepping into the shoes of the insured, as it were, avails himself of the insured’s rights that exist against the wrongdoer at the time of loss or damage. However, this illustration of the right to substitution is applicable only to property insurance. It cannot apply to life insurance because no recovery from a third party (wrongdoer) can be deemed adequate to compensate life.
