SUBROGATION
Subrogation is an insurance principle that closely related with the principle of indemnity. It seeks to prevent insurer from profiting from the insurance contract. Consequently, the amount that the insurer can recover against the offending party is limited to the amount it has actually paid to its insured. It is the legal effect of the payment of claim by the insurer. Upon payment of the claim, the insurer assumes all the legal rights and remedies available to the insured against any and all parties liable for the loss. The cause of the loss or injury must be a risk covered by the policy to entitle the insurer to subrogation. (New Civil Code, Article 2207)
Principle of subrogation.
It is the legal effect of the payment of claim by the insurer. Consequently, There is no need for a written assignment of rights in order to enforce one's right of subrogation. However, the Supreme Court stated that the signing of a Loss and Subrogation Receipt was a valid pre-condition before the insurer could be compelled to turn over the whole amount of the insurance to the insured. (Rizal Surety & Insurance Company vs. CA, 261 SCRA 69)
The insurer can only recover from the offending party up to the amount it had paid to the insured. The insured can no longer recover from the offending party what was paid to him by the insured. However, the insured can still recover for the deficiency if the actual damages were more than what the insurer paid. (Aquino, Timoteo and Sundiang, Jose, Reviewer on Commercial Law. 2003 Edition, 52.)
Enumeration of cases when there is no right of subrogation
They are as follows:
- When the insurer pay the insured for a loss not covered by the policy.(Sveriges Angfartygs Assurans Forening vs Qua Chee Gan, 21 SCRA 12 [1959]),
- The insurer by his own act releases the wrongdoer. (Pan Malayan Insurance Co. vs. Court of Appeals, 184 SCRA 54 [1990])
Credit: The work prepared by scholastic saidy contributor of legusc and a student at Moshi cooperative university (Mocu)
REFERENCES
Cases
1. Rizal Surety & Insurance Company vs. CA, 261 SCRA 69)
2. Sveriges Angfartygs Assurans Forening vs Qua Chee Gan, 21 SCRA 12 [1959
3.Pan Malayan Insurance Co. vs. Court of Appeals, 184 SCRA 54 [1990
Book
1. Aquino, Timoteo and Sundiang, Jose, Reviewer on Commercial Law. 2003 Edition, 52
