Subrogation is an important tool used by insurance companies to recover claims outlays. Because subrogation principles can involve unique issues and vary dramatically by state, local counsel who is familiar with the subrogation laws of the relevant jurisdiction is often critical to the successful prosecution of subrogation actions. Contact us to schedule a consultation to discuss how an attorney from our firm can assist in the planning and prosecution of insurance subrogation actions.
The importance of identifying the source of an insurer's subrogation rights varies by jurisdiction.
Some jurisdictions make a distinction between legal or equitable subrogation that arises by operation of law and conventional subrogation that arises by contract or by an express act of the parties. Accordingly, in some jurisdictions, "an insurer is not necessarily entitled to subrogation as a matter of legal right but may, in fact, be denied subrogation under the terms of its contract." Couch on Insurance, Third Edition, § 222:20. Local counsel can assist in determining the extent to which a policy's subrogation clause reaffirms, waives, makes conditional or otherwise affects an insurer's subrogation rights.
Local counsel who is familiar with the subrogation laws of the relevant jurisdiction is even more important when a conflict between conventional and legal subrogation arises. Depending on the jurisdiction, principles of equitable subrogation or conventional subrogation may govern when conflict exists. In such situations, local counsel can provide valuable assistance in formulating strategy and prosecuting a subrogation action.
Subrogation rights may be created by state statute.
Because an insurer's subrogation rights may be created by, impaired by or forbidden by state law, the assistance of local defense counsel who understands the substantive law of insurance subrogation in a particular jurisdiction can be critical to an insurer's recovery of claims outlays.
Subrogation rights created by contract may be affected by local law.
The treatment of subrogation clauses in insurance contracts varies by jurisdiction. Depending on the jurisdiction in which a subrogation action is prosecuted, a subrogation clause may be treated as restating subrogation rights available under common law, modifying subrogation rights available under common law or as impermissible overreaching by the insurer. Local counsel who is familiar with the treatment of subrogation clauses in a particular jurisdiction can provide valuable assistance in formulating strategy for the recovery of outlays through subrogation.
The requirements for subrogation plaintiffs vary by jurisdiction.
The test for determining who is entitled to prosecute a subrogation action, including the circumstances under which a subrogee or subrogor may prosecute the action in its own name, varies by jurisdiction. Local counsel who is familiar with the requirements for subrogation plaintiffs in a particular jurisdiction can help in determining who is entitled to prosecute a subrogation action.
State law can affect intervention by an insurer.
An insurer may generally intervene in a lawsuit brought by an insured to protect its subrogation rights. Local counsel can work quickly to make sure the insured intervenes before it is too late and to formulate a strategy, including the extent to which, if any, the jurisdiction's equitable distribution laws may affect its recovery.
The remedy of reimbursement may be available in some jurisdictions.
Reimbursement allows an insurer to recover from an insured who has recovered from a third party. Some jurisdictions recognize reimbursement clauses while other jurisdictions treat reimbursement clauses as violative of the so-called "antisubrogation rule" preventing subrogation against the insurer's own insured. Local counsel can help to identify the status of the antisubrogation rule in a particular jurisdiction.
Speak to an Insurance Lawyer
Because an insurer's right to subrogation can vary dramatically by state, local counsel who is familiar with the subrogation laws of the relevant jurisdiction is often critical to the successful prosecution of subrogation actions. Contact us to schedule a consultation to discuss how an attorney from our firm can assist in the planning and prosecution of insurance subrogation actions.
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