After your insurer indemnifies you in terms of your policy of insurance, your insurer has certain rights. One of those rights is the right of subrogation, either by common law or in terms of the insurance policy.
The insurer's right of subrogation enables and entitles the insurer to step into the insured's shoes in order to take advantage of the insured's rights and remedies against third parties.
In its literal sense the word 'subrogation' means the substitution of one party for another as creditor. In the context of insurance, however, the word is used in a metaphorical sense. Subrogation as a doctrine of insurance law embraces a set of rules providing for the reimbursement of an insurer which has indemnified its insured under a contract of indemnity insurance.
Gist of doctrine
The gist of the doctrine is the insurer's entitlement to reimburse itself out of the proceeds of any claims that the insured may have against third parties in respect of the loss. In other words, an insurer who has indemnified its insured for a claim arising out of the negligence or misconduct of a third party has the right to institute action against the third party in the name of the insured to recover what it paid out.
Complementary to the insurer's right of recourse is the insurer's right to take charge of the proceedings against third parties who are liable for the loss to the insured.
The proceedings are conducted in the name of the insured but are at the instance of the insurer. The insured consequently brings the action at the instance of the insurer, but in his own name and for the ultimate benefit of the insurer. If the insured is successful, any proceeds will be for the benefit of the insurer.
The doctrine of subrogation is well recognised in Botswana and forms part of the common law.
