I previously discussed the concept of an insurer’s subrogation rights. Oftentimes, this is referred to as equitable subrogation. An insurer, however, does not have to necessarily wait until it pays insurance proceeds to pursue subrogation rights. If an insurer is sued, there is legal authority that will allow the insurer to initiate a third-party lawsuit for equitable subrogation against the party liable to the insured.
For example, in a recent lawsuit, a property insurance insurer (under a homeowner’s insurance policy) was sued by the homeowners-insured for water damage in their home. The property insurance insurer, in turn, initiated a third-party lawsuit against a plumber for equitable subrogation and common law indemnity as being solely responsible for the water damage to the insured’s home. The appellate court held that the insurer could pursue such third-party claims even though it had not yet paid out insurance proceeds to the insured. See Florida Penisula Insurance Company v. Ken Mullen Plumbing, Inc., Fla. L. Weekly D1811a (Fla. 5th DCA 2015).
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