Equitable Subrogation and Bad Faith

Q

As a primary carrier, we are always concerned about possible bad faith claims brought against us by our insureds; we do our best to avoid such claims. Now, however, we are hearing about something called “equitable subrogation” wherein excess carriers can also make bad faith claims against primary carriers. What can you tell us about equitable subrogation? How can an excess carrier, an entity with whom we have no contractual relationship, file a bad faith lawsuit against us?

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