FIRST OF ALL WE HAVE TO KNOW WHAT SUBROGATION MEANS, IT REFERS TO THE ROCESS BY WHICH THE INSURANCE COMPANY OF THE ASSURED COLLECTS MONEY FROM THE PARTY AT FAULT OR ITS INSURANCE COMPANY IN ORDER TO RECOVER FUND THE ASSURED OR THE INSURANCE COMPANY OF THE ASSURED HAS ALREADY PAID.
NOW THERE ARE 3 TYPES OF SUBROGATION WHICH I WILL BE EXPLAINING WITH THE HELP OF AN EXAMPLE AS IT WILL BE QUICK AND EASY TO UNDERSTAND.
- EQUITABLE SUBROGATION: IS A LEGAL DOCTRINE WHICH ALLOWS THE PARTY WHICH HAS MADE THE PAYMENT ON BEHALF OF ANOTHER PARTY TO LAY CLAIM TO THE RECOVERY OF DAMAGES OR THE FUND FROM THE THIRD PARTY. EXAMPLE, SUPPOSE A HOUSE IN YOUR NEIGHBORHOOD LOST CONTROL OF FIRE AND DUE TO THIS YOUR HOUSE TOO CATCHES FIRE AND GET DAMAGE. NOW YOU FILL A CLAIM FROM YOUR INSURANCE COMPANY WHICH GIVES YOU THE MONEY FOR THE DAMAGE. AFTER COMPENSATION IS SETTLED, YOU CEDES THE RIGHT TO SUE YOUR NEIGHBOR TO YOUR INSURANCE COMPANY TO RECOVER FUNDS. IT IS CALLED EQUITABLE BECAUSE ONE PARTY PAYS THE OBLIGATION OF THE ANOTHER PARTY .
- CONTRACTUAL SUBROGATION: IS A RELATION BETWEEN THE INSURER AND ASSURED AS DEFINED IN INSURANCE CONTRACT,SPECIALLY WHEN THE INSURANCE CONTRACT GRANT THE RIGHT OF SUBROGATION TO THE INSURER. EXAMPLE, SUPPOSE YOUR CAR GETS DAMAGE IN AN ACCIDENT AND YOUR INSURER SETTLES YOUR CLAIM AND BY DOING SO GETS THE RIGHT TO COLLECT FUND FROM THE THIRD PARTY/ FAULT PARTY AS IT IS WRITTEN IN YOUR INSURANCE CONTRACT.
- STATUTORY SUBROGATION: IS THE SUBROGATION ARISES DIRECTLY BY THE ACT OF LEGISLATURE THAT VESTS THE RIGHT OF SUBROGATION WITH A PARTY OR CATEGORY OF PARTIES.