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Can an insurer recover before the policyholder is paid?

The majority view is that a policyholder is entitled to be 'made whole' before an insurer may recover from third-parties in subrogation.

By Matthew D. Stockwell | Updated on October 12, 2016

Upon indemnifying a policyholder for a loss, an insurer generally has the right to recoup its loss by pursuing recovery from other entities or individuals who may be responsible for the policyholder’s damages in the first place.

Subrogation rights vary across jurisdictions and can have serious consequences both for the policyholder and the insurer. Disputes often arise, such as the circumstances under which the insurer may subrogate and for how much, particularly where the policyholder has not been fully compensated for its losses.

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