One of the integral and most important elements of insurance is the so-called subrogation institution. Surprisingly, despite the fact that subrogation is not a new phenomenon, still known to Roman law, in modern society, however, not everyone understands and can explain its essence. For most, this remains a mystery behind the seven castles. Ignorance, and sometimes reluctance to familiarize yourself with the basic terminology, banal frivolity may lead to the fact that the insurer, with whom the contract is concluded, refuses to compensate the damage to the property of the insured by a third party. Moreover, there are quite common cases when, due to his legal illiteracy, the beneficiary is forced to independently pay for the damage. Therefore, in order to protect yourself from such troubles, you need to know the basics of insurance and be able to protect your rights in any situation.
The Institute of Subrogation: Interpretation of the Concept and Legal Essence
The term "subrogation" first appeared in ancient Rome and comes from lat. the words subrogare / subrogatio, which in translation means "replace, make up". According to ancient sources, this is a case of assignment of a right (i.e., a transaction that implies that one of the parties transfers the other right to require certain third parties to fulfill certain obligations). Later, the concept of subrogation was borrowed by the national systems of France, England, Germany, the United States and other countries. The Englishman Mansfield is considered the father of insurance law , claiming that subrogation is a means that makes it impossible to enrich the policyholder with double payments: for the first time at the expense of the insurer, and after - thanks to the person responsible for causing property damage.
In the USA, such a right has been recognized since colonial times and meant nothing more than replacing the beneficiary with an insurance company in actions directed against a third party.
In the Russian Federation, subrogation is regulated by article 965 of the Civil Code, as well as article 281 of the KTM.
Subrogation is ...
Using legal terminology, it is rather difficult for the average person to understand the essence of this phenomenon. What it is is much easier to explain with specific examples.
Let's say you overslept and are late for work. Having jumped out of bed, you got dressed, grabbed the keys to the car from the nightstand and jumped out of the house. Maneuvering on the track in the morning rush hour among hundreds of other vehicles, you have an accident. Fortunately, you have CASCO insurance, and all insurance repair costs are covered by the insurance company. However, after analyzing the accident, it was found that it was not you who was to blame for it, but the driver of the second car involved in the incident. In addition, the true culprit of the accident has its own insurer. In this case, your insurance company has the right to demand that the company representing the interests of the culprit reimburse all costs to it in full.
Thus, subrogation is the right by which the insurance company can demand from the person responsible for the accident reimbursement of expenses incurred under the terms of the contract concluded with the client. The main rule is that as soon as the insurer has fulfilled its contractual obligations to you, it has a legal and justified right to demand from the insurance company the culprit of the accident or to personally compensate all losses from it.
What to do if you are the culprit of the accident
If you provoked an accident, however, you are only partly to blame for the damage caused to the other person, you will only have to be liable for damage caused to the vehicle through your fault. The insurer of the victim probably will not miss the opportunity to exercise the right of subrogation and recover from you or from your insurance company all the costs incurred by him. If your car was not insured, it would be advisable to seek the assistance of a lawyer.
What does subrogation law imply?
Above, we tried to understand what subrogation is. In insurance, there is also such a thing as “subrogation law”. What does it mean? This right (subrogation of the insurer) arises only after the company has paid insurance compensation. Up to this point, she does not have such a right. In addition, it should be noted that the insurer cannot claim an amount exceeding the amount of the payment made. It is also necessary to remember that the right to demand exclusively what the victim (the insured) had at the time of inflicting damage was transferred to the insurance company. In other words, property depreciation is taken into account. For example, if the age of the car is 10 years, and during the repair the old parts were replaced with new ones, then the culprit of the accident can demand reimbursement of costs not for the full cost of repairs, but only for the cost of spare parts that were unusable and had to be replaced as a result Accident. Thus, the insurer, as well as the injured, can demand reimbursement of expenses only taking into account depreciation of the insured property.
Does the right to subrogation differ in anything from the right to implement subrogation?
Indeed, the concepts of “right to subrogation” and “right to implement subrogation” are not identical. They differ from each other in the same way as different types of insurance.
The fact is that the process of exercising the right to subrogation consists of two main stages. At the first stage, the insurer takes measures that subsequently lead to the emergence of his right of subrogation. For this, the insurance company only needs to provide for an appropriate clause in the contract.
At the second stage, the practical exercise of the right to subrogation takes place, which occurs exclusively after the payment of compensation to the beneficiary. Until this time, this right belongs to the policyholder. Therefore, the right to subrogation arising from the moment of signing the contract by the insurer and the beneficiary should be clearly distinguished from the right to implement subrogation, which appears only after the full payment of compensation for losses.
Subrogation and regressive law
In Russian legislation, in addition to the concept of subrogation, there is another similar in meaning legal construction, known as the right of regressive claim, provided for in Section 14 of the Law on Compulsory Motor Liability Insurance. The similarity of these two concepts is as follows:
- Firstly, subrogation is a right that fulfills the educational function of laying civil liability on the person who caused property damage. The same can be said about the insurer's recourse claim.
- Secondly, 3 parties participate in subrogation and regression - the injured party (policyholder), the person who caused the harm, and the party that compensated the damage (insurer).
However, there is a difference between subrogation and regression, which consists in the fact that with subrogation a new obligation does not arise, and with regression it is the other way around.
Is there a statute of limitations for subrogation?
Of course, and it is 3 years, starting immediately from the moment the damage was done. Due to ignorance of the law, many people find themselves in a rather sensitive situation and compensate for the damage twice. For example, immediately after the accident that you provoked, you agree with the injured party to repair the damage on the spot. At the same time, it did not occur to you to demand a receipt for the transfer of money. However, this seems not enough to the wounded victim. He contacts his insurance company, is silent about your agreement, and receives insurance payment. Naturally, after this, the insurer sues you in subrogation order. If in court you cannot present a receipt, the court will make a decision in favor of the insurance company.
But the insurers themselves do not always act honestly and legally. Knowing the statute of limitations, they can still try to sue you in the hope that you have no idea about the three-year effect of this right. And indeed, if you do not know about it, the court, most likely, you will lose.
What types of insurance can we talk about, implying subrogation?
Initially, it must be emphasized that the right to subrogation appears only on the basis of a property insurance contract. It does not apply to personal insurance (life, human health).
So, analyzing the topic of subrogation, the following main types of insurance should be noted: CTP, CASCO, DSAGO.
Be carefull! Know your rights and feel free to defend them!