Subrogation in insurance - what is it? Principle, procedure and collection of subrogation

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

Insurance subrogation is a fairly new concept for Russian legislation, borrowed from foreign judicial practice, in particular, English and German. Therefore, when looking for ways to apply it, references to foreign experience will be quite legitimate.

Method of resolving property disputes

Subrogation in Latin (subrogation) means replacement. Subrogation in insurance is a legally justified transfer of the right to claim, in fact, it is one of the varieties of the assignment of the right to claim. For the most significant protection of the material interests of the insured, compensation for potential damage is provided, enshrined in contractual obligations. To resolve a property dispute, policyholders (beneficiaries) avoid rather unpleasant difficulties in finding the guilty person.

However, the insurer also has the right not to pay insurance compensation to the beneficiary in the absence of material confirmationdamages in the form of various documents, expert opinions, etc.

The concept of regression

Regress is the right of recourse, in which a person who has compensated for harm caused by another person has the right to demand a recourse to this person. For example, if a transport company, as the owner of a motor vehicle, has compensated for the damage caused by its employee, it has the opportunity in the legal field to reimburse its costs, that is, to make a recourse.

In fact, this means that the insurer is not considered as a person who compensated for the harm, since he does not act as the subject of the relationship for compensation for harm, and insurance compensation is an act of compensation for losses to the insured that appeared in the process of bringing him to responsibility due to harm caused to a third party. Thus, the recourse procedure produces compensation for the losses of the insured, and not the victim.

Similarities of insurance claims

It would be a mistake to consider subrogation as one of the varieties of regressive requirements. But these concepts have similar features, subrogation and recourse in insurance are provided by contractual acts and legislative law: the regressive requirement is established by Article 14 of the Federal Law on OSAGO, and subrogation by Article 965 of the Civil Code of the Russian Federation only in relation to insurance legal relations. Both definitions are varieties of the right to claim that arise only when another obligation exists. In addition, the main obligation is terminated by its performance by a third party. It is this execution that is the basis for the occurrence of these insured events.

Subrogation and recourse in insurance, their differences

The difference between regression and subrogation primarily lies in the different mechanisms of action. If subrogation in insurance is an option for transferring the right to claim, then recourse is already a new obligation. It should be noted that they differ in their different legal regulation regimes, as well as the statute of limitations.

Insurance subrogation applies to any individuals, and recourse is limited to a fairly narrow circle of people. In addition, when transferring the right to claim under subrogation, in accordance with the law, the creditor is obliged to inform the insurer of all available information and transfer documents essential for determining by the insurer this right of claim that has passed to him.

Principle of subrogation

The basic principle of subrogation in insurance is the transfer to the insurer that made the payment in accordance with the contract, the right to claim compensation for the amount of loss against the person guilty of the damage caused.

The regulation of such legal relations is carried out by the insurer in compliance with the established legislative and local acts. Thus, subrogation in insurance is a special type of economic interaction based on the redistribution of risk associated with causing material damage to the parties involved in this process. And this kindactivity is carried out by specialized organizations that accumulate insurance premiums and make insurance payments in case of loss in relation to insured property interests. In accordance with Art. 965 of the Civil Code of the Russian Federation, unless otherwise provided in the contract, the insurer that paid the compensation receives the right to claim this specific amount of loss from the person responsible for it.

Amount of loss on subrogation

Loss (clause 2, article 15 of the Civil Code of the Russian Federation) means:

• The amount of expenses incurred now or in the future to restore violated rights.
• The amount of actual damage expressed in loss of or damage to property.
• The amount of lost profits, that is, not received income that the injured person would have received if his rights had not been violated if the civil circulation of insurance had taken place in the usual way.

Thus, the compensatory nature of subrogation provides for the compliance of material liability with the amount of damage caused.

Procedure for receiving a claim

Quite often, an insurance company sends a letter to the perpetrator of an accident containing a list of articles of the Civil Code and the circumstances of the accident, and a summary text informs about the need to pay off debt for a specific amount.

However, following the subrogation procedure, it is necessary to check the full package of claim documents for pre-trial resolution of the conflict situation, which should includefollowing items:

1. Documents that determine and confirm the amount of damage caused must consist of an act of inspection of the car by an independent examination with photographs and a calculation of the cost of repairs or an invoice for payment for the work performed.
2. Documents confirming the fact that an accident was committed by the guilty person. Supporting evidence is a traffic police certificate (form 748) and a court decision or a decision from the state traffic inspectorate.
3. Documents or their copies confirming the rights of the perpetrator - a certificate of state registration, as well as vehicle insurance, checks for its payment and a statement of the occurrence of an insured event.

If the insurance company does not provide all the documents justifying the right of subrogation, it is necessary to write a response to the claim against them. This letter can be sent by mail with notification or personally given to the secretary, writing down the number of the incoming document.

Composing a review letter

A review letter or review is compiled very carefully, and if necessary, it can be ordered from auto experts. It is necessary to check the compliance of the traffic police certificate with the declared damage for repair work, to check the compliance of standard hours with the ongoing technological work to restore the car.

If the amount of damage is justified by the insurance company not on the basis of actually paid repair services, but in accordance with the calculation of an independent examination, then dispute the amount drawn up by themonly an expert company has the right to calculate. Simultaneously with the review, it is advisable to send a cover letter to the insurance company, the purpose of which may be to reduce the amount of the indemnified loss or restructure the debt, and draw up a schedule for its repayment. This letter can also help highlight the seriousness of your rights motives, as well as substantiate your claim for reimbursement of legal fees in court.

Collection work

Collection of subrogation is usually carried out by various legal agencies and involves various types of services:

• Revision of historical data and critical analysis of insurance contracts to determine the amount of debt and the potential for its collection.
• Preparation of documents for pre-trial compensation for damages, as well as preparation of lawsuits.
• Organization of telephone calls, e-mails and visits to the place of residence to individuals who are debtors. In this case, the maximum emphasis is placed on the implementation of pre-trial recovery.
• Protection of the interests of the client in court, as well as in the bailiff service.
• Collection of funds.
• Providing a guarantee for the guilty person in an adequate assessment of the amount of subrogation, regulated by law and not exceeding insurance payments.

Subrogation in insurance is an important part of this business, the continuous and high-quality work of which allows us to reduce the return periodpaid funds. Ultimately, it is thanks to her that the insurance company has the opportunity to significantly increase the efficiency of its activities.