subrogation
Subrogation lets a person who has paid another's debt or loss step into the shoes of the person paid. Three main applications: an insurer who indemnifies the insured can sue the wrongdoer in the insured's name to recover what it paid; a surety who pays the creditor gets all the creditor's rights against the principal debtor (Section 140, Contract Act); and a person who redeems a mortgage may be subrogated to the mortgagee's rights (Section 92, Transfer of Property Act).
Subrogation is different from assignment: the subrogated party can recover only what it actually paid, and in insurance it sues in the name of the insured unless there is an assignment.
Example
Having paid the claim for the damaged cargo, the insurer was subrogated to the owner's rights against the negligent carrier.
In Indian law
- Section 140, Indian Contract Act, 1872; Section 92, Transfer of Property Act, 1882
See also
surety · indemnity · guarantee
Read more in the study notes
- Indemnity, contribution and subrogation (Insurance Law)
- Memorandum of association and the doctrine of ultra vires (Company Law)
- Contract of indemnity (Contract II)
- Contract of guarantee and rights of the surety (Contract II)
- Life insurance: nature, kinds, formation and risk (Insurance Law)
- Fire insurance (Insurance Law)