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Subrogation in Marine Insurance

Subrogation is the legal right of the insurer to step into the shoes of the insured after paying a claim and recover the loss from the third party responsible.

Definition

After indemnifying the insured for a loss, the insurer acquires the right to recover damages from the party who caused the loss.

👉 It is based on the principle of indemnity.

Why Subrogation is Important?

  • Prevents the insured from getting double compensation

  • Helps the insurer recover claim amount

  • Ensures the actual wrongdoer pays

How It Works (Example)

  • A ship is damaged due to negligence of a port crane operator.

  • Shipowner claims insurance.

  • Insurer pays ₹10 crore as compensation.

  • Insurer then sues the port authority to recover ₹10 crore.

➡ This right to recover is called subrogation.

When Subrogation Arises?

  • After the insurer has paid the claim

  • Loss must be caused by a third party

  • Insured must not waive rights against third party without insurer’s consent

Types of Subrogation

  1. Equitable (Legal) Subrogation – arises automatically after payment

  2. Contractual Subrogation – based on policy terms

  3. Subrogation-cum-Assignment – insurer gets full legal right to sue in own name

Marine Insurance Act, 1963 (India)

Under Section 79, insurer is subrogated to all rights and remedies of the insured after paying for a total or partial loss.

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