SUBROGATION

1. SUBROGATION Week 10 Lecture 19

2. RELATIONSHIP TO INDEMNITY • Corollary to indemnity • Assume TP negligently damages your car which is comprehensively insured with an insurer • You have right against TP under law of Tort for damages to vehicle • You have right under insurance contract • This means you can claim twice

3. MEANING OF SUBROGATION • Common law principle. • Places insurer in shoes of insured once claim is paid. • See Castellain v. Preston (1883) • “as between underwriter and the assured the underwriter is entitled to every right of the assured”

4. REQUIREMENT FOR SUBROGATION • Valid contract of insurance • Indemnification by the insurers under the contract in terms of common law • The policy usually provides for subrogation before indemnification • A connection between the subject matter of the insurance and the rights of the insured to which insurers are subrogated

5. TYPES OF INSURANCE • Only applies to policies of indemnity • Fire, accident, export credit, health • Does not apply to • Life and accident

6. RIGHTS AND BENEFITS • Contract • Tort • Statute

7. HOW IS ACTION BROUGHT • Insurer has no right to bring action in name of insured so must sue in latter’s name • If insured already recovered and claims against insurer the underwriter can claim benefit of recovery • Insured does not have to make claim but must bear in mind wording of policy concerning informing insurer of accidents

8. PARTIAL INSURANCE • Where insured insurer for a portion of the risk can’t be indemnified. • Marine insurance an example as is policy with average clause. • Recovery usually divided between insured and insurer on proportional basis. • If there is an excess this should be paid to insured first as it is a first amount payable.

9. SUBROGATION IN IRELAND • Doyle v. Wicklow County Council (1974) upheld rights of subrogation. • According to Buckley the requirement for insurer to sue in insured’s name is to provide cloak of anonymity. • This probably not the case as English law strictly distinguishes insurer and insured see MacGillivray and Parkington

10. LIMITS • Mark Rowlands Ltd v. Berni Inns Ltd (1986) • Insurance taken out for joint benefit of landlord and tenant. • Held the insurance taken out in lieu of landlord’s rights against tenant for maintenance of property • Where unnamed co-insured this is implied in underlying agreement.

11. WAIVER OF SUBROGATION RIGHTS • Can waive rights in policy or in agreement with insured • Problem with privity of contract rule • National Oilwell (1993) held that a clause which waived subrogation against “any assured and any person, etc. whose interests covered by policy” was not a blanket abandonment of rights and only applied where co-insured benefited

12. EXAMPLE - UK • Lister v. Romford Ice (1957) • Father and son involved in motor accident at work where son injured father whilst driving vehicle. • Held insurer of Romford Ice had action against son. • Lord Denning in Morris v. Ford Motor Co calls this an unfortunate decision • Insurers agree never to pursue employees.

13. EXAMPLE - IRELAND • Zurich Ins Co v. Shield (1988) • Durning employed by Quinnsworth driving car in course of employment with Sinnott as passenger. • Sinnott injured by Durning’s negligence. • EL policy cover’s liability of insured for negligence of employees • Motor policy covers negligent driving

14. WHICH POLICY COVERS LOSS • EL provides indemnity to Durning’s employers for negligence in course of employment • Insurer then is subrogated against Durning • Motor policy covers Durning’s negligence • Therefore motor policy pays

15. ANY QUERIES