There are three kinds of subrogation in most insurance coverage disputes.
- Contractual Subrogation
The parties agree that one has a right to step into the shoes oF the other in certain circumstances.
Real Estate Contracts
- Legal Subrogation
Statutes grant someone a right to raise this principle.
Workmen’s compensation claims.
- Equitable Subrogation
An insurer, who pays a policyholder for a loss, may be subrogated to the rights of the policyholder. The insurer can bring a lawsuit against the party who is truly at fault. This claim often arises in equity. Courts have determined that it is only fair that the economic burden be shifted onto the party who is really responsible for the loss.
Medical insurers who have paid the bills for someone who is injured in an accident. The insurer can later bring a claim against the person who caused the injury.
A person’s subrogation rights can be no greater than the rights of the person in whose shoes he is standing.
In other words, in the insurance context, an insurance company cannot recover more than the policyholder would be able to recover from the actual wrongdoer.