Legal Definitions - antisubrogation rule

The antisubrogation rule is a legal principle that prevents an insurance company from seeking to recover money from its ownpolicyholder for a loss that the insurance policy was specifically designed to cover. In essence, once an insurer pays out a claim to its insured, it cannot then turn around and sue that same insured to get its money back, especially if the insured's actions (or inactions) were part of the risk the policy was meant to protect against. This rule ensures that policyholders receive the full benefit of their insurance coverage without fear of being sued by their own insurer for a covered event.

• Example 1: Homeowner's Insurance and Accidental Damage

  Imagine a homeowner, Sarah, accidentally leaves a bathtub running, causing water to overflow and damage her ceiling and the floor below. Her homeowner's insurance policy covers accidental water damage. The insurance company investigates the claim and pays for all the necessary repairs to Sarah's home.

  The antisubrogation rule prevents Sarah's insurance company from then suing Sarah herself to recover the money it paid out for the water damage. Even though Sarah's oversight led to the damage, the policy was specifically purchased to cover such accidental events, and she is the insured party.

• Example 2: Auto Insurance and Negligent Driving

  Consider David, who has comprehensive and collision coverage on his car. While backing out of his driveway, he misjudges the distance and scrapes the side of his car against a mailbox, causing significant damage. His insurance company processes his claim and pays for the repairs to his vehicle.

  Under the antisubrogation rule, David's insurer cannot then pursue a claim against David to recoup the repair costs. His policy is designed to cover accidental damage to his vehicle, even if caused by his own negligence, and he is the policyholder.

• Example 3: Business Liability and Subcontractor as Additional Insured

  A general contractor, "BuildRight Inc.," hires a plumbing subcontractor, "PipeWorks LLC," for a large commercial project. BuildRight Inc.'s general liability insurance policy requires PipeWorks LLC to be named as an "additional insured" for the duration of the project. Due to a mistake by a PipeWorks LLC employee, a pipe bursts, causing significant water damage to the construction site and delaying the project. BuildRight Inc.'s insurer pays for the damages and associated costs.

  Because PipeWorks LLC was an "additional insured" under BuildRight Inc.'s policy for that specific project, the antisubrogation rule prevents BuildRight Inc.'s insurer from suing PipeWorks LLC to recover the money it paid out. For the purposes of that specific loss, PipeWorks LLC is considered an insured party under the policy, and the insurer cannot seek recovery from its own insured.