ABSTRACT
The insurer, upon payment to the assured under the insurance contract, steps into the assured’s shoes with respect to the assured’s claim against a third party. This chapter analyses the requirements that have to be satisfied before the insurer brings a subrogated action against the third party who caused the assured’s loss. In the case of a composite insurance, a question may arise as to the insurer’s right of (subrogated) action against a co-assured who caused the loss to another co-assured who has received payment from the insurer. The matter has not been conclusively ruled by the courts as it is a matter of contractual construction. Key words: principle of indemnity, prevention of double recovery, third party, not to prejudice the insurer’s subrogation rights, duty of good faith, implied term, subrogation before or after payment to the assured, recovery from third party, insurer’s right to recovery from the third party, co-insurance, joint and composite insurance, circuity, construction of the underlying contract, construction of the insurance contract, waiver of subrogation, principle of equity, juridical basis of subrogation, allocation of recovery from third party, insurance in layers, the ‘top down’ approach.
