Knowing The Principles Of Subrogation
When our vehicle is hit by another motorist so that it is damaged, usually directly we will ask for compensation for some money to the hitman to compensate for the cost for repair. Because our vehicle is still in insurance coverage, usually we will also submit a claim to the insurance company. In insurance, this kind of practice is actually not justified because there is a principle of subrogation.
The application of the principle of subrogation in insurance is usually by the way the insurance company directly pays claims to the insured for the losses he has suffered. Furthermore, the insurance company will collect compensation to the third party who for negligence has caused losses to occur worth the claim that has been paid to the party insured. This subrogation right will usually be listed in the insurance policy. Nevertheless, in its implementation depends heavily on the consideration of the insurance company, whether to use it or not.
This principle of subrogation is often regarded as a safeguard or companion of the principle of indemnity. The principle of indemnity itself is to provide compensation to the insured in order to restore the same financial position after the loss as the condition before the loss occurred. If there is no principle of subrogation, then the insured will potentially get a replacement value that is greater or double than it should be so that it is not in accordance with the principle. indemnity.
In Indonesian law, the principle of subrogation is regulated in Article 284 of the Indonesian Commercial Law which reads: "A person who has paid the loss of an insured item, replaces the insured in all rights obtained to third persons related to the issuance of such losses, and the insured is responsible for every act that is can give the insurer rights to the third person. "
The purpose of the article is that if the insured's loss is caused by a third party, the compensation is transferred to the third party and not to the insurance party. However, if the insured party still asks for compensation to the insurance then the insurance party has the right to ask for compensation to the third party because the insurance party is entitled to replace the position of the insured.
The subrogation definition itself is actually taken from the case of "Burnand v. Rodocancachi (1882)" in England. In such cases, the insurer, after granting indemnity to the insured, is entitled to receive back from the insured anything he can receive from other sources. Under this definition, subrogation rights can only be applied to insurance contracts related to indemnity contracts. Therefore, the principle of subrogation cannot be applied or does not apply in life insurance policies or self-injury insurance policies.
Why is subrogation considered a companion to the principle of indemnity (corollary of indemnity)? To make it easier to understand, we will illustrate with an example of the following events: Andi insured his car to insurance company A for a period of 12 months of coverage at his own risk (a certain amount must be borne by Andi himself, as the insured in each loss and each incident) amounted to Rp500,000.
In the police period, Andi’s car was hit by Iwan's car. In fact, the position of Andi's car was parked in the right place. As a result of the incident, Andi's car suffered damage and caused losses worth Rp3,000,000. As a result, Andi also filed a claim for damages to Iwan and also in parallel filed a claim with insurance company A. Because the losses experienced are guaranteed by the insurance policy, insurance company A ought to pay Andi's claim of Rp3,000,000-Rp500,000 = Rp2,500,000.
After insurance company A paid a claim based on the principle of indemnity to Andi of Rp2,500,000, it turned out that a few days later Andi received a compensation payment from Iwan of Rp3,000,000. because it had hit Andi’s car until it was damaged. Preferring to the principle of subrogation, then on a number of payments from Iwan, Andi must pay Rp2,500,000 to insurance company A that had previously paid the claim to Andi worth Rp2,500,000.
When does Rights Subrogation Arise ?
Subrogation rights for insurers can arise from several factors, namely:
- The rights of the insured arising from an act of breaking or against the law (in English law called a "tort") such as negligence committed by others against him.
- The rights of the insured arising from a contract or agreement that he has entered with another person.
- The rights of the insured under the Law.
In addition, the subrogation rights of the insurer can also arise from the object of coverage itself or part of the object of coverage (rights and salvage or the rest of the goods) where the insurer has paid indemnity based on the terms of the policy. Subrogation rights like this are outside the subrogation or definition of subrogation as described earlier, but rather on the application of the principle of indemnity that does not allow the insured to enjoy a payment of indemnity greater than full indemnity.
As for citing the common law in the UK and also Article 284 of the Commercial Law in Indonesia, the subrogation rights of the insurer have not arisen as long as the insurer has not paid the relevant claim to the insured. This provision or rule can cause problems for the insurer because after the loss that caused the claim occur, the insurer cannot actively participate or fight on behalf of the insured in an effort to claim the right of the insured to the party responsible for the loss. Of course, this condition can have a bad effect on the subrogation rights of the insurer.
To ensure that the insurer's subrogation rights run well, usually the insurer in many policies lists subrogation provisions or clauses that allow the handler to ask the insured, at the insurer's expense, to take steps deemed necessary, before or after the insurer makes indemnity payments. against the insured, to obtain compensation from other parties.
Just like the principle of indemnity, the principle of subrogation is not absolute so in certain things or situations it is possible to adjust. In this regard, insurers or companies can make modifications to the workings of subrogation. The following are some examples of the modifications :
1. Knock for knock Agreement. This agreement is an intercompany agreement (agreement between insurance companies) which stipulates that between insurance companies that regulate the motor vehicle insurance business, will not exercise subrogation rights against each other in the event of damage to their insured vehicles caused by a collision event between them; the vehicles of their insured.
2. Other agreements. Agreement between the motor vehicle insurer and the property insurer that guarantees the loss/damage of property that is insured to the property policy due to being hit by a motor vehicle. In this agreement, the parties agree to jointly contribute in the property losses concerned based on agreed proportions.
3. Waiver of subrogation in the policy. Certain policies, such as liability employers policies, include a clause waiver of subrogation that contains a statement that the insurer waives its subrogation rights in the event that an employee causes another employee bodily injury.