Subrogation is the assumption by a third party (such as a second creditor or an insurance company) of another party's legal right to collect a debt or damages. It is a legal doctrine whereby one person is entitled to enforce the subsisting or revived rights of another for one's own benefit. A right of subrogation typically arises by operation of law, but can also arise by statute or by agreement. Subrogation is an equitable remedy, having first developed in the English
Court of Chancery The Court of Chancery was a court of equity in England and Wales that followed a set of loose rules to avoid a slow pace of change and possible harshness (or "inequity") of the common law. The Chancery had jurisdiction over all matters of equ ...
. It is a familiar feature of
common law In law, common law (also known as judicial precedent, judge-made law, or case law) is the body of law created by judges and similar quasi-judicial tribunals by virtue of being stated in written opinions."The common law is not a brooding omnipresen ...
systems. Analogous doctrines exist in civil law jurisdictions. Subrogation is a relatively specialised field of law; entire legal textbooks are devoted to the subject.


Countries which have inherited the
common law In law, common law (also known as judicial precedent, judge-made law, or case law) is the body of law created by judges and similar quasi-judicial tribunals by virtue of being stated in written opinions."The common law is not a brooding omnipresen ...
system will typically have a doctrine of subrogation, though its doctrinal basis in a particular jurisdiction may vary from that in other jurisdictions, depending upon the extent to which equity remains a distinct body of law in that jurisdiction. English courts have now accepted that the concept of
unjust enrichment In laws of equity, unjust enrichment occurs when one person is enriched at the expense of another in circumstances that the law sees as unjust. Where an individual is unjustly enriched, the law imposes an obligation upon the recipient to make res ...
has a role to play in subrogation. In contrast, this approach has been stridently rejected by the
High Court of Australia The High Court of Australia is Australia's apex court. It exercises original and appellate jurisdiction on matters specified within Australia's Constitution. The High Court was established following passage of the '' Judiciary Act 1903''. ...
, where the doctrinal basis of subrogation is said to lie in the prevention of unconscionable results: for example, the discharge of a debtor or one party getting double recovery.


The situations in which subrogation will be available are not closed and vary from jurisdiction to jurisdiction. Subrogation typically arises in three-party situations. Some common examples of subrogation include: * ''Indemnity insurance.'' An indemnity insurer may be entitled to be subrogated to the rights of insured as against a third party who is responsible for the damage to the insured. * ''Law of guarantees''. A surety may be entitled to be subrogated to the rights of the creditor as against the principal debtor. * ''Trust creditors.'' A creditor of a trustee may be entitled to be subrogated to the trustee's right of indemnity. * ''Subrogation to outgoing securities.'' A lender who advances funds for the purpose of discharging a security may be entitled to be subrogated to the third party's security as against the borrower. * ''Bills of exchange.'' The indorser of a bill of exchange may be entitled to be subrogated to the holder as against the acceptor (who is liable to indemnify the indorser).

Indemnity insurer's subrogation rights

"Subrogation" has been used in this context to refer to two distinct situations. First, after paying out under a policy of indemnity insurance, an insurer may be entitled to stand in the shoes of the insured and enforce the insured's rights against the third party tortfeasor who is responsible for the loss. This is subrogation in its proper or core sense. Insurance subrogation, and, specifically, the types and amounts of payments that can be recovered, differs from jurisdiction to jurisdiction. Secondly, after paying out under a policy of indemnity insurance, an insurer may be entitled to sue the insured where the insured has already had his loss made good by the third party tortfeasor. That is, the insurer has a claim against the insured so as to ensure that the insured does not get double recovery. This situation might arise if, for example, an insured claimed in full under the policy, but then started proceedings against the third party tortfeasor, and recovered substantial damages. Strictly speaking, this is not a case of subrogation; it is a case of recoupment.

Travel insurance subrogation process

In an " excess" or " supplemental" travel insurance policy where there is a 'first payer' clause, through the subrogation process an insurer is legally entitled to seek cost-sharing up to a certain percentage from a member's private group
health insurance Health insurance or medical insurance (also known as medical aid in South Africa) is a type of insurance that covers the whole or a part of the risk of a person incurring medical expenses. As with other types of insurance, risk is shared among ...
provider after the insurer pays out a travel insurance claim. These plans are less expensive but if there is a major claim made, Insurance carriers, such as RBC insurance, can offer While these supplemental travel insurance policies may be less expensive in the short run, they can have devastating consequences if a serious and costly health crisis occurs while travelling. This means that if a client makes a claim, the insurer will recover that amount from the member's private group health insurance provider—for example $100,000 of the $200,000 total. This can become problematic if the member later has a serious illness because many private group health insurance providers have a lifetime maximum coverage amount-$500,000 for example-for its extended health plans. If the member purchases travel insurance from their own extended health-care provider, a claim would not have affected their lifetime maximum.

Surety's subrogation rights

surety In finance, a surety , surety bond or guaranty involves a promise by one party to assume responsibility for the debt obligation of a borrower if that borrower defaults. Usually, a surety bond or surety is a promise by a surety or guarantor to pay ...
who pays off the debts of another party may be entitled to be subrogated to the creditor's former claims and remedies against the debtor to recover the sum paid. This would include the endorser on a
bill of exchange A negotiable instrument is a document guaranteeing the payment of a specific amount of money, either on demand, or at a set time, whose payer is usually named on the document. More specifically, it is a document contemplated by or consisting of a ...
. The surety will then have the benefit of any
security interest In finance, a security interest is a legal right granted by a debtor to a creditor over the debtor's property (usually referred to as the '' collateral'') which enables the creditor to have recourse to the property if the debtor defaults in maki ...
in favour of the creditor for the original debt. Conceptually this is an important point, as the subrogee will take the subrogor's security rights by operation of law, even if the subrogee had been unaware of them.

Subrogation rights against trustees

trustee Trustee (or the holding of a trusteeship) is a legal term which, in its broadest sense, is a synonym for anyone in a position of trust and so can refer to any individual who holds property, authority, or a position of trust or responsibility to ...
of who enters into transactions for the benefit of the
beneficiaries A beneficiary (also, in trust law, '' cestui que use'') in the broadest sense is a natural person or other legal entity who receives money or other benefits from a benefactor. For example, the beneficiary of a life insurance policy is the person ...
of the trust is generally entitled to be indemnified out of the trust assets; this is secured by way of an equitable
lien A lien ( or ) is a form of security interest granted over an item of property to secure the payment of a debt or performance of some other obligation. The owner of the property, who grants the lien, is referred to as the ''lienee'' and the per ...
or first charge over the trust assets. This is a proprietary security interest. Trust creditors (that is, persons who have become creditors of the trustee ''qua'' trustee) may be entitled to be subrogated to the trustee's lien. This is a particularly precarious 'right' of trust creditors: a trustee may not have a right of indemnity (for example, because the trustee has committed a breach of trust in incurring the liability to the creditor in question) or it may be limited (for example, where the trustee has committed an unrelated breach of trust and the clear accounts rule operates). In some jurisdictions it is possible for the trustee's right of indemnity to be excluded altogether. In these cases, subrogation may be rendered worthless or impossible.

Lender's subrogation rights

Where a lender lends money to a borrower to discharge the borrower's debt to a third party (or which the lender pays directly to the third party to discharge the debt), the lender may be entitled to be subrogated to the third party's former rights against the borrower to the extent of the debt discharged.


Where a
bank A bank is a financial institution that accepts deposits from the public and creates a demand deposit while simultaneously making loans. Lending activities can be directly performed by the bank or indirectly through capital markets. Because ...
, acting on what it believes erroneously to be the valid mandate of its client, pays money to a third party which discharges the customer's liability to the third party, the bank is subrogated to the third party's former remedies against the customer.


If subrogation is available, the subrogated party is entitled to stand in the shoes of another and enforce that other party's rights. If the equity is established, the court may effect the subrogation remedy by way of equitable lien, charge, or a constructive trust with a liability to account. Crucially, the claimant's rights are wholly derivative, hence the claimant has no higher rights than the person to whom he or she is subrogated.

Waiver of subrogation

In practice insurers may agree to a waiver of their subrogation rights.Blackfriars Group Insurance
What is Subrogation Under An Insurance Policy?
accessed 8 October 2022

Subrogation in civil law jurisdictions

Analogous doctrines exist in civil law countries, for example, articles 1651-1659 of the ''Civil Code of Quebec'' deal with subrogation under Quebec's civil law:


External links

NASP (National Association of Subrogation Professionals)

Northern Buckeye vs Lawson
– 2004
eBook: Next-Generation Subrogation Solutions
– 2014 {{Authority control Common law Insurance law Restitution fr:Subrogation personnelle en droit civil français