PRINCIPLE OF SUBROGATION


 PRINCIPLE OF SUBROGATION
• Depending on this principle following the insured is compensated for losing as a result of injury to property insured, then the right of ownership of such property passes to the insurer.
 This principle is corollary of the principle of indemnity and is applicable to all contracts of indemnity.
Subrogation means substituting one creditor for another. Principle of Subrogation is an expansion and another corollary of the principle of indemnity. In addition, it applies to all contracts of indemnity.
Based on the principle of subrogation, once the insured is compensated for the losses as a result of injury to his insured property, then your ownership right of such property shifts to the insurer.
This principle is applicable only once the damaged property has any value after the function causing the
damage. The insurer can benefit out of subrogation rights simply to the extent of the quantity he's paid to the
insured as compensation.
As an example: Mr. Arvind insures his house for ` 1 million. The house is completely destroyed by the negligence
of his neighbour Mr. Mohan. The insurance company shall settle the claim of Mr. Arvind for ` 1 million. At the
same time, it could file a law suit against Mr. Mohan for ` 1.2 million, the marketplace value of the house. If
insurance company wins the case and collects ` 1.2 million from Mr. Mohan, then your insurance company
will retain ` 1 million (which it has recently paid to Mr. Arvind) plus other expenses such as court fees. The
balance amount, if any will be fond of Mr. Arvind, the insured




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