Equitable subrogation arises by operation of law rather than contract, permitting a paying insurer to assert the insured's claims against a responsible third party or, in some circumstances, against another insurer.
The insurer's rights are no greater than the insured's would have been.
Alternative Names:
Insurer Subrogation, Equitable Subrogation Claim
Why it Matters?
In the coverage context, excess insurers use equitable subrogation to pursue a primary carrier that unreasonably refused a within-limits settlement, standing in the insured's position to assert the bad faith claim. That is the principal route by which excess carriers recover after funding a settlement the primary should have paid, and it is recognized in most jurisdictions even where the insured itself suffered no out-of-pocket loss.
Frequently Confused with
Related terms
Frequently asked questions
Can an excess insurer sue the primary carrier?
Are the insurer's rights broader than the insured's?
