Subrogation
The equitable process by which an insurer who has indemnified an insured's loss steps into the insured's shoes to pursue any remedy the insured had against a third party responsible for that loss.
Independent editorial summary — not the official statute text. Read the official version on legislation.gov.uk.
Subrogation lets an insurer that has paid out on a claim recover its outlay from whoever actually caused the loss, so that the wrongdoer does not escape liability simply because the victim happened to be insured. The Supreme Court in Bank of Cyprus UK Ltd v Menelaou explained the underlying juridical nature of subrogation by approving Lord Hoffmann's statement that, 'as Millett LJ pointed out in Boscawen v Bajwa [1996] 1 WLR 328, 335, subrogation is not a right or a cause of action but an equitable remedy against a party who would otherwise be unjustly enriched.' In other words, subrogation is not itself a freestanding claim — it is a remedy the court fashions to reverse unjust enrichment or to give effect to a security or right that would otherwise be lost.
In an insurance context, once the insurer pays the claim in full, it can use the insured's name (or, in some circumstances, its own) to sue the party responsible for the loss, and any recovery is applied first to reimburse the insurer. The Bank of Cyprus case confirms that the same underlying equitable remedy of subrogation also arises outside insurance — for example, where a lender's money discharges a secured debt — and that in all such cases it operates 'in order to prevent unjust enrichment' rather than as a transfer or assignment of the original right.
Related terms
Official sources
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