Subrogation
SUBROGATION
Presented by
Matthew Skinner and Justin Coss
cvjs A0107151124v7 150520
7.8.2006
Page 1
Table of Contents
1.
3
1.1
1.2
1.3
2.
Introduction
3
5
5
Restrictions on the right of subrogation
2.1
2.2
2.3
2.4
3.
The doctrine of subrogation
The source of an insurer's subrogation rights
The exercise of the right of subrogation
Effect of contracts between the insured and third parties
Multiple Insureds
Waiver of Subrogation Clauses
Provisions of the ICA
6
6
8
10
13
13
3.1
3.2
3.3
3.4
4.
Control of proceedings
13
14
16
17
Partially covered losses
Obligations in relation to the pursuit of proceedings
Release of a third party/Settlement
Conduct of the Insurer
17
4.1
4.2
4.3
4.4
4.5
4.6
5.
Distribution of the proceeds of recovery from third parties
17
17
18
18
19
19
The issues relating to sharing of proceeds
Who brought the recovery action
The applicability of policy limits and deductibles
Uninsured Losses
Interest
Effect of s67 of the Insurance Contracts Act and proposals for its reform
Conclusion
cvjs A0107151124v7 150520
22
7.8.2006
Page 2
1.
Introduction
1.1
The doctrine of subrogation
Subrogation literally means the substitution of one person for another1. The term is used to refer to the situation where an insurer, who has extended indemnity to an insured under a policy of insurance, becomes entitled to exercise the rights that the insured has against a third party who caused or contributed to the loss sustained by the insured 2. The doctrine is not administered as a legal right, but as a principle that is applied to serve the ends of justice and to do equity3.
In the insurance context, the doctrine of subrogation is associated with two discreet aspects of the relationship between an insurer and an insured:
1.
the doctrine allows the insurer to exercise, in the insured's name, rights that the
Presented by
Matthew Skinner and Justin Coss
cvjs A0107151124v7 150520
7.8.2006
Page 1
Table of Contents
1.
3
1.1
1.2
1.3
2.
Introduction
3
5
5
Restrictions on the right of subrogation
2.1
2.2
2.3
2.4
3.
The doctrine of subrogation
The source of an insurer's subrogation rights
The exercise of the right of subrogation
Effect of contracts between the insured and third parties
Multiple Insureds
Waiver of Subrogation Clauses
Provisions of the ICA
6
6
8
10
13
13
3.1
3.2
3.3
3.4
4.
Control of proceedings
13
14
16
17
Partially covered losses
Obligations in relation to the pursuit of proceedings
Release of a third party/Settlement
Conduct of the Insurer
17
4.1
4.2
4.3
4.4
4.5
4.6
5.
Distribution of the proceeds of recovery from third parties
17
17
18
18
19
19
The issues relating to sharing of proceeds
Who brought the recovery action
The applicability of policy limits and deductibles
Uninsured Losses
Interest
Effect of s67 of the Insurance Contracts Act and proposals for its reform
Conclusion
cvjs A0107151124v7 150520
22
7.8.2006
Page 2
1.
Introduction
1.1
The doctrine of subrogation
Subrogation literally means the substitution of one person for another1. The term is used to refer to the situation where an insurer, who has extended indemnity to an insured under a policy of insurance, becomes entitled to exercise the rights that the insured has against a third party who caused or contributed to the loss sustained by the insured 2. The doctrine is not administered as a legal right, but as a principle that is applied to serve the ends of justice and to do equity3.
In the insurance context, the doctrine of subrogation is associated with two discreet aspects of the relationship between an insurer and an insured:
1.
the doctrine allows the insurer to exercise, in the insured's name, rights that the