DR.

RAM MANOHAR LOHIYA NATIONAL

LAW UNIVERSITY, LUCKNOW

2022-23

TITLE OF THE PROJECT:

PRINCIPLE OF INDEMNITY AND SUBROGATION IN INSURANCELAW

UNDER THE SUPERVISION OF: SUBMITTED BY:

DR. APARNA SINGH ANMOL PARIHAR

ASSISTANT PROFESSOR (INSURANCE AND BANKING LAW) B.A. LL.B (HONS.)
DR. RMLNLU, SEMESTER- VITH
LUCKNOW ENROLMENT NO. 200101026
 INSURANCE LAW; INDEMNITY AND SUBROGATION

TABLE OF CONTENTS

INTRODUCTION ................................................................................................................................................................. 3

INDEMNITY; NOT ACTUALLY AS THE INDEMNITY IN CONTRACT BUT JUST THE PRINCIPLE...................... 4

INDEMNITY; INTRODUCTION AND DEFINITION....................................................................................................... 4

USES OF INDEMNITY PRINCIPLE IN INSURANCE LAW .......................................................................................... 5

INDEMNITY PRINCIPLE; CONDITIONS ........................................................................................................................ 5

METHODS OF PROVIDING INDEMNITY ...................................................................................................................... 6

LIMITATIONS ON INSURERS LIABILITY ..................................................................................................................... 7

LIFE INSURANCE; EXCEPTION TO INDEMNITY PRINCIPLE .................................................................................. 8

INTRODUCTION; SUBROGATION IN INSURANCE LAW .......................................................................................... 9

DEFINITION; DOCTRINE OF SUBROGATION ............................................................................................................. 9

THE CHANGING CONTOURS OF THE DOCTRINE: FROM SIMPSON TO PRESTON .......................... 11

SIMPSON V. THOMSON ................................................................................................................................................ 11

CASTELLAIN V. PRESTON: DOCTRINE OF SUBROGATION TO ENFORCE THE FUNDAMENTAL RULE .... 12

THE GENESIS OF SUBROGATION IN INSURANCE LAW....................................................................................... 13

THE INDIAN LAW OF SUBROGATION ...................................................................................................................... 14

UNION OF INDIA V SRI SARADA MILLS .......................................................................... 14

ECONOMIC TRANSPORT V CHARAN SPINNING MILLS .............................................. 15

CONCLUSION .................................................................................................................................................................. 16

BIBLIOGRAPHY .............................................................................................................................................................. 17

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INTRODUCTION
Without any exception in time phrase, man always had and will have the propensity to secure
himself from the loss/ harm and with the span of time the concept of insurance begot. People started
to secure themselves from any uncertain event so that if that event occurs then they can put
themselves in the position in which they were before the occurrence of that event. Gradually the
concept of insurance evolved, and many new concepts were introduced within it some as a rule
and some based on equity. And in these concepts, indemnity and subrogation were accommodated
a pertinent part.

It is obvious that Indemnity and Subrogation are very salient feature of the contract. If we confine
ourselves within the periphery of the contract and that too in facile and general term then the
indemnity principle applies where one party (indemnifier) assures another party (indemnity holder)
for the loss suffered because of the act of himself or any third party (indemnitor) that he/ she will
be compensated. But the incorporation of this principle only cinch that only one party will be
protected and he/ she would suffer no loss and if we leave this principle intact from here then it
will tantamount to grave injustice to the party who indemnified. So further to protect the interest
of the indemnifier, the principle of subrogation begets. Subrogation makes it certain that the
indemnifier will jump into the shoes of the indemnity holder and from then indemnifier will took
upon himself/ herself the rights and liabilities of the indemnity holder. Insurance is a contract
between insurer and insured for the protection of the insured from any future loss. Insurance is
type of indemnity in which insurer assures insured that he will be compensated for the loss. But
what if the loss has been caused because of the act of any third party? Then after compensating
insured the insurer will be in the position of the insured to sue the third party. Thatis how indemnity
and subrogation are very much pertinent for the discussion on the insurance law.

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INDEMNITY; NOT ACTUALLY AS THE INDEMNITY IN CONTRACT BUT JUST

THE PRINCIPLE

Insurance is a contract because it has all the elements of a contract; offer, acceptance,
consideration, legal object, consent and many others. Section 124 of the Indian Contract Act
defines indemnity as "a contract by which one party promises to save the other from loss caused
to him by the conduct of the promisor himself or by conduct of any other person. So, here in a
contract, in facile and general term, indemnifier promises to compensate by an act of himself or
any other person but at the same time taking a little aberration from this an indemnity in insurance
means the insurer promises to compensate insured against a loss suffered because of any future
uncertain event. So, it is not the indemnity in contract which applies here but the nitty-gritty of the
principle.

INDEMNITY; INTRODUCTION AND DEFINITION

Every contract of insurance, except life insurance, is no more than an indemnity. The insurer
undertakes, within the limit of the obligation, to compensate the insured for his actual loss, but
never to more than compensate. To the extent to which the insured is demnified, he will be
indemnified, but no more than indemnified.

According to the Cambridge International Dictionary ‘Indemnity’ is “Protection against possible

damage or loss” and the Collins Thesaurus suggests the words “Guarantee”, “Protection”,
“Security”, “Compensation”, “Restitution” and “Reimbursement” amongst others as suitable
substitute for the word “Indemnity”. The words protection, security, compensation etc. are all
suited to the subject of Insurance but the dictionary meaning or the alternate words suggested do
not convey the exact meaning of Indemnity as applicable in Insurance Contracts.

In Insurance the word indemnity is defined as “financial compensation sufficient to place the
insured in the same financial position after a loss as he enjoyed immediately before the loss
occurred. “Indemnity thus prevents the insured from recovering more than the amount of his
pecuniary loss. It is undesirable that an insured should make a profit out of an event like a fire or
a motor accident because if he was able to make a profit there might well be more fires and more
vehicle accidents. As in the case of Insurable Interest, the principle of indemnity also relies

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heavily on the financial evaluation of the loss but in the case of life and disablement it is not
possible to be precise in terms of money.

Castellain v. Preston1 illustrated the operation of this principle as;

Every contract of marine and fire insurance is a contract of indemnity and of indemnity only, the
meaning of which is that the assured in a case of loss is to receive a full indemnity, but is never
to receive more. Every rule of insurance adopted in order to carry out this fundamental rule, and
if ever any proposition is brought forward, the effect of which is opposed to this fundamental
principle, it will be found to be wrong.2

USES OF INDEMNITY PRINCIPLE IN INSURANCE LAW

To avoid intentional loss

According to the principle of indemnity insurer will pay the actual loss suffered by the insured. If
there is any intentional loss created by the insured the insurer’s is not bound to pay. The insurer
will pay only the actual loss and not the assured sum (higher is higher in over-insurance).

To avoid an Anti-social Act

If the assured is allowed to gain more than the actual loss, which us against the principle of
indemnity, he will be tempted to gain by destruction of his own property after it insured against a
risk. So, the principle of indemnity has been applied where only the cash-value of his loss and
nothing more than this, though he might have insured for a greater amount, will be compensated.

INDEMNITY PRINCIPLE; CONDITIONS

The following conditions should be fulfilled in full application of principle of indemnity.

❖ The insured has to prove that he will suffer loss on the insured matter at the time of
happening of the event and the loss is actual monetary loss.
❖ The amount of compensation will be the amount of insurance. Indemnification cannot be
more than the amount insured.
1
(1883) LR 11 QBD 380.
2
Ibid.

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❖ If the insured gets more amount then the actual loss; the insurer has right to get the extra
amount back.
❖ If the insured gets more amount then from third party after being fully indemnified by
insurer, the insurer will have right to receive all the amount paid by the third party.
❖ The principle of indemnity does not apply to personal insurance because the amount of
loss is not easily calculable there.

METHODS OF PROVIDING INDEMNITY

The Insurers normally provide indemnity in the following manner and the choice is entirely of the
insurer:
1. Cash Payment
In majority of the cases the claims will be settled by cash payment (through cheques) to the assured.
In liability claims the cheques are made directly in the name of the third party thus avoiding the
cumbersome process of the Insurer first paying the Insured and he in turn paying to the third party.
2. Repair
This is a method of Indemnity used frequently by insurer to settle claims. Motor Insurance is the
best example of this where garages are authorized to carry out the repairs of damaged vehicles.
In some countries Insurance companies even own garages and Insurance companies spend a lot on
Research on motor repair to arrive at better methods of repair to bring down the costs.
3. Replacement
This method of Indemnity is normally not preferred by Insurance companies and is mostly used in
glass Insurance where the insurers get the glass replaced by firms with whom they have
arrangements and because of the volume of business they get considerable discounts. In some
cases of Jewellery loss, this system is used specially when there is no agreement on the true value
of the lost item.
4. Reinstatement
This method of Indemnity applies to Property Insurance where an insurer undertakes to

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restore the building or the machinery damaged substantially to the same condition as before the
loss. Sometimes the policy specifically gives the right to the insurer to pay money instead of
restoration of building or machinery.
Reinstatement as a method of Indemnity is rarely used because of its inherent difficulties
e.g., if the property after restoration fails to meet the specifications of the original in any material
way or performance level then the Insurer will be liable to pay damages. Secondly, the expenditure
involved in restoration may be much more than the sum Insured as once they have agreed to
reinstate, they have to do so irrespective of the cost.

LIMITATIONS ON INSURERS LIABILITY

1. The maximum amount recoverable under any policy is the sum insured, which is mentioned on
the policy. The amount is not the agreed value of the property (except in Valued policies) nor is it
the amount, which will be paid automatically on occurrence of loss. What will be paid is the actual
loss or sum insured whichever is less.
2. Property Insurance is subjected to the Condition of Average. The underlying principle behind
this condition is that Insurers are the trustees of a pool of premiums from which they meet the
losses of the few who suffer damage, so it is reasonable to conclude that every Insured should
bring a proper contribution to the pool by way of premium. Therefore, if an insured deliberately
or otherwise underinsures his property thus making a lower contribution to the pool, he is not
entitled to receive the full benefits. The application of this principle makes the insured his own
Insurer to the extent of underinsurance i.e. the pro-rata difference between the Actual Value and
the sum insured.
The amount of loss will be shared between the Insurer and the insured in the proportion of
sum insured and the amount underinsured. The formula applicable for arriving at the
amount to be paid by the Insurance Co. is Claim = Loss X (Sum Insured / Market Value)
Example: Mr. Kumar has insured his house for Rs.5 lacs and suffers a loss of Rs.1 lac due to fire.
Atthe time of loss the surveyor finds that the actual market value of the house is Rs.10 lacs. In this
case applying the above formula the claim will be as under:

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Loss = 1 lac sum insured = 5 lacs Market Value = 10 lacs. Therefore, 1 lac X 5 lacs / 10lacs
= 50,000/- Claim = Rs 50,000/-

LIFE INSURANCE; EXCEPTION TO INDEMNITY PRINCIPLE

The indemnity principle in insurance conch that insured will get what he lost. So, insured
in no way is going to get additional compensation than the amount of damage. Mulling
over then presents before us a fact that the subject which is insured can be calculated in
monetary term otherwise how anyone is supposed to pay equal to what has been damaged.
Life insurance, which is what its name suggests, is exception to this indemnity principle
and a non-indemnity insurance. Because of the simple reason that the value of a man can’t
be estimated or calculated. A life insurance contract does not resemble a contract of
indemnity because the insurer does not undertake to indemnify the assured for any loss
on maturity or death of the assured but promises to pay sum assured in that event. A policy
of insurance on one’s own life is not an indemnity because it is merely a contractto pay
a certain sum in the event of death. The assured merely pays the premium to the insurer in
order to secure a certain sum payable to him or to his representatives in case of death. There
is no question of indemnification in such a case, for the loss resulting from death, cannot
be estimated in money. Life insurance is adopted as a means of saving; the idea of
indemnity is foreign to it.

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INTRODUCTION; SUBROGATION IN INSURANCE LAW

The doctrine of subrogation has confounded academicians and practitioners for many decades
due to its elusive nature. The doctrine has undergone various changes throughout the last two
centuries in various contexts. A review of the cases applying the doctrine would demonstrate its
flexibility and fecundity. It holds a special place in common law jurisdictions due to its nature
and importance in indemnity contracts. In fact, it is often viewed as a necessary feature of the
contract of indemnity.

It has a special place in contracts of insurance which are also contracts of indemnity. It has been
reformulated in a seminal case to include principles of equity within its ambit and entitle insurers
to equitable reliefs. Currently, Indian Courts are averse of applying equitable principles as
robustly as common law courts, especially in commercial laws due to the very nature of
adjudication it undertakes. Thus, the common law doctrine of subrogation must be understood
in India in such a perspective.

DEFINITION; DOCTRINE OF SUBROGATION

The doctrine of subrogation is one of the most recognized doctrines in common law. The doctrine
was developed to prevent unjust enrichment. For instance, in Assignee v. Mahoney,3 the cashier
of a bank allowed the defendant to overdraw from her account. When the cashier discovered the
shortage, he gave his note for the amount. He subsequently became bankrupt and the bank
established its claim against him. The assignee, then, sued the defendant for the amount. It was
held in the case that the assignee was subrogated in place of the bank and could sue the defendant
for the said amount. The doctrine is of subrogation is only applicable to a person who comes with
clean hands. Subrogation must be permitted in all cases where it can prevent unjust enrichment
and the plaintiff is entitled to equitable relief.

The doctrine of subrogation has been defined in many ways. A dictionary definition of the term
would be—

Black’s Law Dictionary defines the doctrine as—

3
Assignee v. Mahoney, 150 S.W. 503 (Ky.).

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“The substitution of one person in the place of another with reference to a lawful claim,
demand or right, so that he who is substituted succeeds to the rights of the other in relation
to the debt or claim, and its rights, remedies, or securities.”4

A rather pithy exposition of the doctrine can be found in Justice Miller’s opinion in the Supreme
Court of the United States Case of Aetna L. Ins. Co. v. Middleport5, where he wrote—

“The doctrine of subrogation is derived from the civil law, and ‘It is said to be a legal
fiction, by force of which an obligation extinguished by a payment made by a third person
is treated as still subsisting for the benefit of this third person, so that by means of it one
creditor is substituted to the rights, remedies, and securities of another….It takes place for
the benefit of a person who, being himself a creditor, pays another creditor whose debt is
preferred to his by reason of privileges or mortgages, being obliged to make the payment,
either as standing in the situation of a surety, or that he may remove a prior incumbrance
from the property on which he relies to secure his payment. Subrogation, as a matter of
right, independently of agreement, takes place only for the benefit of insures; or of one
who, being himself a creditor, has satisfied the lien of a prior creditor; or forthe benefit
of a purchaser who has extinguished an incumbrance upon the estate which he has
purchased; or of a co-obligor or surety who has paid the debt which ought, in whole or in
part, to have been met by another.’ Sheldon Subrogation, pp. 2,3.”

Another very important and controversial explanation of the doctrine can be found in Brett L.J.’s
opinion in Castellain v. Preston6—

“…that as between the underwriter the assured the underwriter is entitled to the advantage
of every right of the assured, whether such right consists in contract, fulfilled or unfulfilled,
or in remedy for tort capable of being insisted on or already insisted on, or in any other
right, whether by way of condition or otherwise, legal or equitable, which can be, or has
been exercised or has accrued, and whether such right could or could not be enforced by
the insurer in the name of the assured by the exercise of acquiring ofwhich right or
condition the loss against which the assured is insured, can be, or has

4
The CenturyDictionary.
5
Aetna L. Ins. Co. v. Middleport, 124 U.S. 534, 538-9.
6
Castellain v. Preston, (1) 8 Q.B.D. 613 (1883).

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been diminished. That seems to me put this doctrine of subrogation in the largest form
possible”

It must be noted that even though the cases were decided in the context of an insurance contract,
the doctrine of subrogation was not restricted in the context of insurance contracts. It has
historically been invoked in various situations, especially in the context of a contract of
guarantee. Authors have distinguished the doctrine of subrogation as being applicable in three
distinct situations— legal subrogation, conventional subrogation and statutory subrogation. In
this project, we shall try to understand the concept in light of insurance law.

THE CHANGING CONTOURS OF THE DOCTRINE: FROM SIMPSON

TO PRESTON

SIMPSON V. THOMSON
The Doctrine of Subrogation was a doctrine which was, historically, developed in the domain of
guarantee contracts and predominantly applied in insurance contracts and cases of unjust
enrichment. The Doctrine was limited to rights of action in torts and contract. In the seminal case
of Simpson v. Thomson7, Lord Cairns understood the doctrine in the following terms—

“On payment the insurers are entitled to enforce all the remedies, whether in contract or
in tort, which the insured has against third parties, whereby the insured can compel such
parties to make good the loss insured against.”

In Simpson, the respondents were underwriters who paid Burrell for the loss of his ship as total
loss after it was abandoned. The ship collided with another ship, the Fitzmaurice, due to the
negligence of the master of Fitzmaurice. However, interestingly Burrell owned both the ships.
The question in this case was whether the underwriters had a claim from Burrell due to him
owning the Fitzmaurice and the negligence of its master. The Court of Sessions found that a
“fresh right” was created in the underwriter’s favour and the underwriter would be entitled to
payment from Burrell. However, the House of Lords, on appeal, rejected this formulation and
held that the underwriters could only claim subrogation.

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Since, in that case Burrell could not have claimed from himself, there was no right or action to

7
Simpson v. Thomson, (1877) 3 App.Cas. 279.

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which Burrell could be subrogated.8The Court distinguished subrogation as a “transfer of a right

of action”from the Court of Session’s “fresh right created”. The Court, clearly and, in our opinion,
rightly distinguished subrogation from equity. Authors have vehemently criticized the judgment
for being unjust for not applying equity, while maintaining the distinction between subrogation
and equity.

CASTELLAIN V. PRESTON: DOCTRINE OF SUBROGATION TO ENFORCE

THE FUNDAMENTALRULE

A notable divergence from Simpson was seen in the Queen’s Bench judgment in Castellain. As
noted above, Simpson was criticized for not meting justice to the underwriters in the case. In a
case where subrogation, as formulated by Simpson, does not apply, it was felt that an equitable
relief must be granted. The Courts were competent to do so. However, Castellain took a quite
different approach.

In Castellain, the Chairman of Liverpool and London and Globe Insurance Company (Insurer)
issued a policy against the insured’s building. The insured entered into a separate sale agreement
with the purchasers after issuing the policy. Later, a fire broke out in the insured building. The
insurer paid a sum of 330 Pounds pursuant to the policy. The purchase agreementwas completed
after the settlement, without taking the loss due to fire into account. It was claimed by the insurer
that, due to the purchase agreement the insured incurred profit, which was against the principle
of an insurance contract. As noted above, Chitty J., in the first instance, denied the insurer’s claim
by relying on the formulation of subrogation in Simpson.

On Appeal, however, this position was reversed. Brett L.J.’s pithy exposition of the law in the
judgment is quite accurate in the formative part where he lays down two fundamental rules of
insurance law—

1. A Contract of insurance in a marine or fire policy is a contract of indemnity.

2. In case of loss, against which the policy is made, the assured is entitled to full indemnity,
but nevermore.

It is, thus, clear from the above formulation that the court had to prevent unjust enrichment in
8
ibid.

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an insurance contract. This consideration further guided the Court to reformulate the doctrine of
subrogation. Brett L.J. noted that that earlier the doctrine of subrogation was not applicable to
insurance contracts as underwriters were not sureties, as in contracts of guarantee or indemnity.
However, Brett L.J. noted that the doctrine of subrogation is a necessary doctrine to enforce the
fundamental rule. The question, then, was whether the doctrine was limited to enforcement of
tort and contractual remedies only.

Of course, if the doctrine as formulated in Simpson were to be followed, there was no right tobe
subrogated for in Castellain. The insured would have certainly profited from the sale agreement,
and consequently breached the fundamental rule. This, in our opinion, was the guiding principle
behind Castellain. Due to this, Brett L.J. considerably extended the application of the Doctrine
to include equitable rights within it. Brett L.J.’s final formulation of the doctrine has been stated
in the preceding part of this chapter. As a result, the doctrine of subrogation is now understood
as including accrued as well as exercised rights, legal orequitable.

THE GENESIS OF SUBROGATION IN INSURANCE LAW

As noted above, subrogation was not applied in insurance law until much later as underwriters in
an insurance contract were not sureties. It was only after an insurance contract was recognized as
a contract of indemnity that the principle was extended to insurance law as well. The law of
subrogation has been mostly developed in common law and, in this section, we shall be dealing
with cases from common law jurisdictions before turning to the Indian law in the next section. The
doctrine has mostly attracted the attention of practitioners rather than academics and is treated as
an “indispensable part of insurance law.” Thus, it is necessary that this project includesa thorough
study of certain landmark cases on the law of subrogation.

It must be noted though, that the doctrine of subrogation does not apply to all forms of insurance
contracts. As noted above, it only applies to insurance contracts which are contractsof indemnity.
Since, life insurance contracts and accident insurance were not contracts of indemnity. However,
this position has not been fleshed out with much clarity. But it is also highly unlikely that victims
in such insurance policies would ever be unjustly enriched and the

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position has not really been tested beforecourts.9

THE INDIAN LAW OF SUBROGATION

The law of insurance is still in its nascent stages as compared to other common law jurisdictions.
This has been attributed due to the lesser volume of commerce in India and the lack of credit and
investment information. The law of subrogation, too, has witnessed a paucity of treatment from
Indian Courts. While statutes have explicitly recognized this right in the context of Marine
Insurance as a necessary incident in a contract of indemnity.

The Courts have not received enough appropriate list to develop the law as other common law
jurisdictions did. While Courts did indulge with the doctrine in other respects, for example in the
context of transfer of property, the courts indulged with it in respect of insurance contracts much
later.

UNION OF INDIA V SRI SARADA MILLS

In Union of India v Sri Sarada Mills10, the Supreme Court had to consider the nature of
subrogation and the manner in which it is to be exercised. In the said case, the insured respondent
recovered a certain sum from the insurer and assigned all their rights against the railway
administration to the insurer. The question was whether the insurer can bring an independent suit
in its own name without reference to the insured in the action.

The Court considered whether the letter of subrogation in the given case also assigned a right to
sue to the insurer. In such a case, the insurer can sue in his own name, however, such an
assignment by itself would be bad in law. However, the Court found that this was not in issue
as there was no enforcement sought for assignment. The Majority opinion in the case found that
the insurer had a right to sue in its name.

Matthew J., however, dissented on this point and distinguished Vasudeva. It held that Vasudeva
was correct in noting that the right of subrogation does not ipso jure enable an insurer to bring
a suit in his name. However, he found that Vasudeva was incorrect in stating

9
Reuben Hasson, ‘Subrogation in Insurance Law—A Critical Evaluation’, 5(3) Oxford Journal of Legal Studies
416(1985).
10
Union of India v Sri Sarada Mills, AIR 1973 SC 281.

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that subrogation is an exception to Section 6(e) of Transfer of Property Act, 1882.

ECONOMIC TRANSPORT V CHARAN SPINNING MILLS

The Supreme Court had the chance to revisit the issue in Economic Transport Organization

v. Charan Spinning Mills.11 The Court held that—

I. Equitable right of subrogation arises when the insurer settles the claim of the assured,
for the entire loss. When there is an equitable subrogation in favour of the insurer, the
insurer is allowed to stand in the shoes of the assured and enforce the rights of the
assured against the wrongdoer.
II. Subrogation does not terminate nor puts an end to the right of the assured to sue the
wrong-doer and recover the damages for the loss. Subrogation only entitles the insurer
to receive back the amount paid to the assured, in terms of the principles of subrogation.

III. Where the assured executes a letter of subrogation, reducing the terms of subrogation,
the rights of the insurer vis-a-vis the assured will be governed by the terms of the letter
of subrogation.
IV. A subrogation enables the insurer to exercise the rights of the assured against third
parties in the name of the assured. Consequently, any plaint, complaint or petition for
recovery of compensation can be filed in the name of the assured, or by the assured
represented by the insurer as subrogee-cum- attorney, or by the assured and the insurer
as co-plaintiffs or co-complainants
V. Where the assured executed a subrogation-cum- assignment in favour of the insurer (as
contrasted from a subrogation), the assured is left with no right or interest.
Consequently, the assured will no longer be entitled to sue the wrong-doer on its own
account and for its own benefit.

11
Economic Transport Organization v. Charan Spinning Mills, 2010 (2) SCALE 427.

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CONCLUSION
Above discussion cinch that the concepts of indemnity and subrogation are vital for the purpose
of insurance law. In short, it is obvious that the purpose of the indemnity principle is to fetter
insured from benefitting and tries to enforce the principle of prevention of unjust enrichment. It
is the salient feature of the indemnity to restore the insured in the position he was before the
accident or harm as if no such loss occurred. With very few exceptions, like life insurance, all
contract of insurance is indemnity. And stepping forward, subrogation is actually nothing more
than a further step in the implementation of the principle of indemnity. Because this equity cinch
that the insurer will be in the position of the insured to sue the third party who cause damage/s
and that too only when the insured took insurance money rather than suing the third party. This
is clearly based on the principle of equity because if subrogation is not allowed then the insured
will be able to take the benefit from both the sides; one from insurer and another from the third
party. For sure, the subrogation principle applies only when there is a loss caused by any third
party and subrogation can exist only when there is indemnity means it can’t be applied in the
cases of life insurance. The reason for this is not obscure. Indemnity is first stair and only then
the subrogation comes into play if there is damage from any third party.

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BIBLIOGRAPHY
Principles of Insurance Law by Justice Ranganath Mishra
Law of insurance by Avtar Singh

ONLINE SOURCES

SCC Online
Manupatra
https://www.investopedia.com/terms/i/indemnity_insurance.asp
https://www.investopedia.com/terms/s/subrogation.asp
http://www.mondaq.com/india/x/392864/Insurance/Doctrine+Of+Equitable+Subrog
ation+In+Indian+Law
https://www.insureon.com/insurance-glossary/subrogation
https://www.sid.ir/En/Journal/ViewPaper.aspx?ID=466006
http://www.legalservicesindia.com/article/565/Extent-of-Indemnity-in-Insurance-
Claims.html

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