A Video Explaining the Equitable or Contractual Remedy of Subrogation

The equitable doctrine of subrogation places the subrogee in the precise position of the one whose rights are subrogated. [Wimer v. Pa. Emp. Benefit Trust Fund, 939 A.2d 843, 853 (Pa. 2007); Chow v. Rosen, 812 A.2d 587, 590 (Pa. 2002); Pennsylvania Mfrs.’ Ass’n Ins. Co. v. Wolfe, 626 A.2d 522, 525 (Pa. 1993); see also Paxton Nat’l Ins. Co. v. Brickajlik, 522 A.2d 531, 532 (Pa. 1987).] Subrogation is the remedy called into existence for the purpose of enabling a party secondarily liable, but who has paid the debt, to reap the benefit of any securities which the creditor may hold against the principal debtor, and by the use of which the party paying may thus be made whole. [ Ario v. Reliance Insurance Co., 602 Pa. 490, 980 A.2d 588, No. 3 MAP 2008 (Pa. 10/05/2009).]

In an insurance situation the insurance company, after it pays a loss to its insured, obtains by equity or contract, the right to an assignment from its insureds, up to the amount paid, of the insured’s rights against third parties responsible for the loss. Texas law, like every other jurisdiction, recognizes three sources of subrogation rights: equitable, contractual, and statutory. [Fortis Benefits v. Cantu, 243 S.W.3d 642, 648-49 (Tex. 2007).]

Every claim investigated by a professional claims person requires a thorough investigation of subrogation possibilities. The insurance claims person who ignores the possibility of subrogation is completing only half of a thorough investigation. The remedy arises from tort, contract or equitable remedies available to the insured as the result of a loss that, after an insurer pays, must be assigned to the insurer.

In 1748, the House of Lords in England decided in Randall v. Cochran, that an insurer for an English ship that was taken by the Spanish was permitted to bring suit in the name of its insured against the administrators of a public prize fund, collected by the British government from the sale of captured Spanish ships.

© 2021 – Barry Zalma

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 52 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 53 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

Go to the podcast Zalma On Insurance at https://anchor.fm/barry-zalma;  Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library/ Read posts from Barry Zalma at https://parler.com/profile/Zalma/posts; and Read last two issues of ZIFL here.