Did you know: where an insured refuses to (or does not) provide the insurer with consent to commence proceedings in the insured’s name, the insurer may need to actually commence proceedings against its own insured to compel the insured to lend their name to the litigation.
Although in practice this may rarely happen as insureds will usually co-operate with an insurer, in rare (and difficult) circumstances, it does happen. Depending on limitation periods, you may need to commence proceedings against your insured, and third parties, simultaneously.
By way of quick recap – subrogation takes place where an insurer, after indemnifying their insured, looks to stand in the shoes of its insured and recover amounts from an at-fault third party. The insurer does not have a claim in their own name – rather, any claim is in the name of the insured against the third party or third parties. Therefore, having the insured on board is important not just when it comes to evidence, but whether a matter can even get off the ground!
Leaving aside fun considerations of whether subrogation derives from equity, common law or contract, the fact is that an insurer does have a right of subrogation, meaning an insurer can force an insured’s hand if it has to. Before doing so, it is important to explain everything clearly and simply to an insured, act reasonably, do everything you reasonably can to obtain the insured’s assistance without resorting to litigation against them, and send the appropriate letters that you may need to rely upon later. Strategically, an insurer should also consider just how much value an insured is going to be in subrogated recovery proceedings with processes such as discovery, evidence preparation, etc where the insured is not co-operating, and what impact that may have on proceedings even if they do take off.
On top of that, don’t forget other important considerations such as insured vs uninsured loss and limits to subrogation.
The content of this article is intended to provide a general guide to the subject matter. Specific advice should be sought about your specific circumstances.
