Legal Definitions - antisubrogation rule

Definition: The principle that an insurance carrier cannot assert a claim on behalf of the insured or for payments made under the policy against its own insured for the risk covered by the policy.

Subrogation: The substitution of one party for another whose debt the party pays, entitling the paying party to rights, remedies, or securities that would otherwise belong to the debtor.

For example, if a surety pays a debt, they are entitled to any security for the debt held by the creditor and the benefit of any judgment the creditor has against the debtor. They may proceed against the debtor as the creditor would. This is known as subrogation.

Conventional Subrogation: Subrogation that arises by contract or by an express act of the parties.

Legal Subrogation: Subrogation that arises by operation of law or by implication in equity to prevent fraud or injustice. Legal subrogation usually arises when:

1. The paying party has a liability, claim, or fiduciary relationship with the debtor.
2. The party pays to fulfill a legal duty or because of public policy.
3. The paying party is a secondary debtor.
4. The paying party is a surety.
5. The party pays to protect its own rights or property.

The antisubrogation rule prevents an insurance carrier from using subrogation against its own insured for the risk covered by the policy. This means that if an insured suffers a loss covered by their insurance policy, the insurance carrier cannot seek reimbursement from the insured for any payments made under the policy.

For example, if a homeowner's insurance policy covers damage to their home caused by a storm, the insurance carrier cannot seek reimbursement from the homeowner for any payments made under the policy. This is because of the antisubrogation rule.