After indemnification: protecting the insurer’s right of recovery

Payment of an insurance indemnity may be followed by a separate question: can the insurer recover from the third party responsible for the loss?

Article 972 of the Lebanese Code of Obligations and Contracts provides for statutory subrogation once the insurer has paid the insurance indemnity. It allows the insurer to exercise the insured’s rights and actions against the third party whose conduct caused the covered damage.

Recovery begins with the claims file

Evidence of the cause of the loss, the responsible party’s involvement, the policy and payment of the indemnity should be retained. Any settlement or release affecting the insured’s rights against third parties deserves careful review. Applicable limitation periods also need to be identified for the particular claim.

The limits also matter

Article 972 permits the insurer to be discharged from liability, wholly or partly, where the insured’s conduct prevents subrogation. It also restricts recourse against specified relatives, employees and members of the insured’s household, subject to an exception for fraud by those persons. The application of these provisions depends on the circumstances of the file.

The practical point is to consider recovery during the handling of the claim, rather than waiting until after indemnification.

Legal source

The information on this website is provided for general informational purposes only and does not constitute legal advice.